What will happen in the outsourcing sector this year?

I wrote a story today about the year ahead in outsourcing. I spoke to people across the industry and got some interesting comments.

Below are the comments I got but what do you think?
Harry McDermott, CEO art consultancy Hudson & Yorke which works in the Telecoms sector, believes a mobile operator will acquire a company to add managed mobile services to its portfolio.

“I believe managed mobility services will become a big issue in 2010. I think we will see a big mobile operator acquire a major player in the fixed telco or IT outsourcing space

Tony Rawlinson, managing director financial services at sourcing consultancy Equaterra

“When I look at what’s hot and what’s not in outsourcing in Financial Services I see 2010 being a year of restructuring, EquaTerra expects further mergers and acquisitions on the client side and additional consolidation on the vendor side, all driving re-alignment of outsourcing contracts alongside new deal flow.”

Robert Morgan, director Hamilton Bailey says a household name in Europe might disappear

“We will see the absorption of a major European outsourcer into another company probably an American company.”

“There are still companies that are run quite badly and are clinging to scale being everything.”

Duncan Aitchison, EMEA president at sourcing consultancy TPI says he expects to see an increase in the total value of contracts signed in this market into 2010.

“We believe we are likely to see a rise in the number of large scale contracts awarded both globally and in Europe in the next 6-9 months.”

“In 2009 we saw relatively slow large scale outsourcing activity, (those contracts valued at €20 million or more), however. The earlier slowdown of activity was driven by a lack in corporate decision making, as companies struggled to cope with the impact of the global recession. With signs of confidence returning to the market, the larger businesses, who are the primary drivers of the outsourcing market, appear to be willing to make more strategic, long term, decisions about their sourcing strategies.”

Peter Brudenall, lawyer at Hunton & Williams, says the next 12 months will see a few of the big Indian outsourcing service providers increase their European capability through acquisition. “We will see some of the Indian suppliers building up their delivery presence in Europe. This will mean buying medium to large service providers.”

Ade McCormack, business IT consultant at Auridian and Financial Times columnist, thinks 2010 will be the year that cloud based services gain momentum.

“There will be a big move to cloud based outsourcing. The increased financial pressure on organisations means they need to be more demand orientated.”

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Some valuable and insightful points are made here. I agree that 2010 looks set to be an exciting year for the outsourcing sector and so far all the signs point to a positive increase compared to the previous year. In regards to developments in specific sectors, I agree with Harry McDermott’s comments however, I’d like to add that mobility is not just an issue for 2010; I’d expect that over the next two to three years this sector will gain traction and grow, creating new opportunities.

It’s also interesting to see predictions of increased M&As. With the slowdown in business demand, there is likely to be consolidation across a variety of industries.

It’s fair to say that the use of technology in outsourcing will stay high on the agenda of most businesses and I’d expect to see a continued focus on cost reduction as businesses continue to feel cost pressures and revaluate their IT portfolios as a result. In particular, Cloud Computing will grow and gain significance, creating new partner and client ecosystems, as businesses seek to reduce spending through automation and virtualisation.

As with much of the world’s economic development, it will also be interesting to track the progress of developing economies like China, India and Latin America. As these players continue to growth in financial and political power, they will surely have an impact on the outsourcing sector too.


Thanks for your comments. Yes I think the people I spoke to made some very interesting points. All the points seem to make perfect sense to me.

By the way I am looking forward to reading you blogs from the WEF.