Consider the Source

Buckle Up for 2008

Today's blog on the state of the outsourcing industry comes from Peter Allen, Partner and Managing Director, TPI.

With the risk of sounding too dramatic, I think that 2008 is going to be a defining year for the outsourcing industry.

Whether the U.S. economy has entered a recession or not is still up for debate. What’s certain is that companies in consumer-oriented industries are behaving as if protection of profits and cash flow are much more important than driving growth.

How does this relate to outsourcing?

The 3C Sourcing Framework

Today's blog on the future of outsourcing comes from Peter Allen, Partner and Managing Director, TPI.

One risk of offering projections about the future is that astute observers will keep score. Alas, so be it.

The demise of the labor arbitrage era as it relates to sourcing is rapidly approaching. The labor turnip has been squeezed and a new era dawns.

When future historians look back on the timeline of services outsourcing, their archeological record will show a period when productivity mattered less than the ability to throw cheap labor at transactional work.  The ash layer of effort-based contracting will be strikingly thin, and it will serve as a distinct demarcation between industry eras.

It’s a Sourced World After All: Scenarios for a Recession

Sid Pai’s recent blog on a likely U.S. slump led me to conclude: Globalization means that contagion spreads quickly and broadly -- a large country’s pain causes the world to ache -- and the resulting economic fallout induces near-sightedness in senior executives. Recession leads to shifts in outsourcing trends, in turn requiring realignment of IT and business process strategies to take into account newly created risks and opportunities.

SHORT-TERM SLOWDOWN?

Today's blog on the effect that a U.S. recession could have on the outsourcing industry is by Siddharth A Pai, Partner & Managing Director, TPI India.

Despite the subprime crisis, most commentators, self included, doubted predictions of a U.S. recession a few months ago.  This confidence has steadily eroded. Concern about the global economy is mounting - the International Monetary Fund (IMF) has slashed its forecast for U.S. growth and warned that no country will be immune from a "global slowdown."  The U.S. Federal Reserve has announced stimulus packages of over $150bn and is cutting interest rates.