The Next Big Thing
Posts about next generation technologies and their effect on business.

IT Outsourcing: Single source or multi-sourcing??

As the economy improves, I see an emerging
trend in outsourcing business
:




  • Smaller deal size - from billions to millions


  • Shorter duration - from 7-10 years to 3-5 years


  • Functional/niche areas versus the complete
    outsourcing


  • From "Outsourcing
    single source deal to Multi-sourcing
    "


  • Client playing the "integrator" role


What I do not see is the reduction cost in responding to an
RFP or the time a client takes to make final decision!


The shorter, lower value outsourcing deals, and, at times in
the industry verticals or niche areas, open up doors for smaller suppliers
including low cost Indian competitors like Wipro, Infosys, and TCS are  creating a different level of competition
giving customers more leverage. As the cost pressure increases, I see large US
companies will focus on reducing costs by developing products in niches
specialties, and shifting work to lower cost onshore regions & other
countries. Large players seriously exploring the option of acquiring niche
players for increased speed to market. And that's not forgetting about the low
cost offshore competitors will expand their onshore capabilities &
resources - Indian
players, Infosys, Vipro and TCS have begun adding local staff in the Americas
and Europe to support this trend.



As the client opts for number of smaller, short
duration deals with number of suppliers, governance and end-to-end integration
will play key role to achieve the overall business value.


 

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About the Author(s)
  • Steve Simske is an HP Fellow and Director in the Printing and Content Delivery Lab in Hewlett-Packard Labs, and is the Director and Chief Technologist for the HP Labs Security Printing and Imaging program.
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