Global recession may slow growth for offshoring,outsourcing: Expert

Hyderabad, Feb 22 (UNI) India and other low-cost labour markets are likely to witness slowing growth rates for outsourcing services in 2008 due to looming global recession, Hackett Globalization and Outsourcing Practice Leader Julio Ramirez said today. Addressing the press here, Mr Ramirez said there was still a significant long-term opportunity for continued business growth in India as companies in North America, Europe and industrialised Asian markets struggle to reduce costs and drive higher effectiveness in finance, IT, HR, procurement and other key Selling, General, and Administrative (SG&A) areas by further increasing their use of offshore outsourcers and captive shared service delivery models.

But in response to the threat of an economic downturn, many companies are ''hitting the pause switch'' on their globalisation efforts, focussing instead on across the board cuts that do not result in sustainable performance improvement, he pointed out.

''Interest in offshoring is still high, and the best companies are moving forward with projects that combine globalisation with strategic process transformation.'' ''During recession, the best companies focus their efforts on rapidly driving higher efficiency in back office processes, freeing up excess working capital and enhancing their enterprise performance management systems and processes.

''These companies will use the economic slowdown to accelerate their outsourcing initiatives, increase the scope of existing contracts, or in the case of in-sourcing, push more work to their offshore captives,'' he added.

''A number of service providers have expanded their capabilities to assist customers with these processes delivered from their offshore network of service centers.'' ''But the study of prior recessions tells us, as the threat of a recession deepens, many companies will switch their attention to operational and financing challenges, often resorting to simplistic solution that are not sustainable and may in fact weaken competitive positioning,'' he said, adding that a number of service providers are already witnessing certain projects intentionally being deferred until the market uncertainty subsides.

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