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Follow UsThe world economy does not seem to be in any better shape than before.
The canvas is made up of large patches of bad news with occasional
spots of good tidings. Despite that the global services industry continues
to chug along; there is no cause for any permanent gloom on the
horizon even if the sun is not shining so brightly.
Recent results of leading Indian outsourcing vendors reveal that the past quarter was better than expected and that the outlook for 2013 is modestly decent.
The 4Q2012 TPI Index identifies three short-term market trends:
a) In the US, the adoption of large deals has expanded to include companies that are ranked Global 200 to Global 500. Between 2010 and 2012, the share of large deals in this segment increased by 32%.
b) Emerging markets are driving sourcing annual contract values (ACV). Since 2007, Latin America and Mexico has seen a 150% increase in ACV, while India and China has seen an increase of 100%.
c) The BPO industry has grown by 60% in terms of ACV in the last two years with growth coming in from industry-specific solutions. Interestingly, all the three short-term trends are irreversible and hold great growth potential. Further, these trends will play out over the next few years. In that sense, these trends are not short-term.
On the longer horizon, the global services industry has three sources of opportunity and value; they also represent the three vectors of change.
1. The first one is technology-driven disruption brought in by cloud, analytics, mobility, and social media.
2. The second one deals with managing sourcing relationships and performance in a far more collaborative and co-opted approach.
3. The third is about optimizing the mix of sourcing models-insourcing, onshoring, offshoring, and shared services-and integrating them for seamless service delivery.
Organizations are still looking at driving costs down (as the number one priority) but they are expecting better levels of business services. Service providers who can master these three levers of value would lead the new order of leadership in global services.