Bangalore, Jan 8 (ANI/Business Wire India): Globalization has taken a strong turn in the past few years. Countries which had earlier encountered roadblocks to globalize have realized the need to source globally for multiple reasons.
Drivers have shifted from mere cost arbitrage to more strategic fulfilments such as organic business growth across geographies and reduction in time to market.
Worldwide shortage of relevant skills and talent has increased pressure across firms to acquire talent globally.
Offshore markets are also tending to move towards being mature global markets for large-scale business developments. Together, client markets are expanding to go beyond the USA.
According to Avinash Vashistha, Chairman and CEO Tholons, "As the IT and BPO industry matures, we see industry consolidation in 2008 among the mid-tier service firms with large service firms leveraging M and A as key element of their growth strategy. Third wave of Globalization will be driven by Infrastructure Managed Services (IMS), Healthcare and Engineering Services."
Increasing pressures such as the economic downturn in the US and the rupee appreciation has resulted in multiple repercussions including expansion and focus on other client markets.
USA still remains the single largest market and will see significant competition from Europe.
Maturity in the offshore markets has given confidence to the European firms to further globalize work. Newer business models are emerging in the sell side to beat competitive market pressures eg. "outcome-based" pricing, SaaS and global footprint.
The buyer market is increasingly becoming more educated with globalization resulting in informed decision making.
Dr. Pradeep K Mukherji, President - Consulting at Tholons said: "2008 will be a year for both challenges and opportunities in outsourcing. While the US elections, weakening of the dollar and sub-prime issues will pose challenges; opportunities will present themselves by way of greater acceptance of outsourcing by small and medium Business and constant search for limited availability of qualified talent. Overall the velocity of outsourcing is likely to be contained"
Clients are now experienced and informed in formulation and execution of their Globalization plans and search for qualified talent will drive client's selection of geographies.
"We see clients focusing on cities rather than just countries in their search for qualified pool. Cities in Philippines, Russia and Eastern Europe will emerge as preferred destinations for customer service, product engineering and multilingual processes respectively", said Paul B. Santos, President - Investments at Tholons.
Healthcare industry in US alone is over $ four Trillion and we see it as a significant contributor to the third wave of outsourcing.
Dr. Garima Vashistha, President - Healthcare at Tholons said, "Healthcare tourism, pharmaceutical research including clinical trials, revenue cycle management and analytics will lead the globalization of healthcare processes. Adoption of services globalization in the ultra conservative pharmaceutical industry will continue to be slow in 2008 but will be on a steep curve as we look towards 2015."
Many of our predications for 2007 are now established business trends. The emerging trends that we see taking shape in the services globalization space is expected to have a strong impact in shaping the future of global outsourcing.
Tholons' Top Ten Trends in Services Globalization - 2008 will have a significant impact to services globalization for investors, buyers, providers and to emerging centers of excellence:
A. M and A and Private Equity - Growth Strategy through Investments and Acquisitions
-- Going global with private equity participation.
-- Consolidation in the small to medium sized IT/BPO/KPO firms in India.
-- European firms will be both aggressive in building offshore capabilities and will also be key targets for acquisitions.
B. Buy Side
-- Buyer's confidence on Globalization of Services which Impact top line is expected to grow (marketing, engineering design, R and D, etc.).
-- Small and Medium Size enterprises and new geographies like Europe will become more aggressive adopters of global outsourcing to remain competitive.
C. Sell Side
-- Service providers will aggressively pursue competitive strategies which will enable them to establish positions of dominance in their chosen segments.
-- SaaS and "outcome-based" pricing to be in top gear to combat competitive pressures.
-- Sustenance of the Offshore Advantage.
D. Centers of Excellence
-- Buyers will influence emergence of Centers of Excellence - Focus will be Cities not just Countries.
-- Providing quality client services rather than mere low cost solutions will be the main driver.