Even before the global economic downturn, many organizations had already begun re-examining their offshore outsourcing strategies. Some companies are cutting back spending on their outsourced operations, while others are expanding their offshore operations in Asia. Given the companies’ different take on outsourcing and current market conditions, it is crucial for offshore service providers to know which industry or sector they should focus on for business expansion or acquisition of new accounts.
Let’s start with the market research industry. In MarketResearchCareers.com’s “2009 Annual Survey of Market Research Professionals”, data shows that fewer U.S. market research companies are offshoring all or certain business functions. Only 18% of organizations providing or using market research engage in offshoring, down from 25% in 2008. According to the report, “With surprise, there appears to be a significant reduction in the amount of offshoring conducted within the market research industry. Perhaps this is driven by attitudes, perceived quality issues, and the effort often required to review and revise work performed overseas”.
The financial sector appears to offer more opportunities than the market research sector. Ever since the banking meltdown, more and more banks are forced to merge. But they’re not off the hook yet. “As these banks merge, they face a huge task of integrating their software applications, consolidating their data centres and other trading platforms into a single entity, so that their customers are able to transact without having to face any merger-related issues”, reports BusinessWeek. So, where would these banks seek relief from? “And since offshoring will help them save costs by 30-40%, these merged banking entities are seeking to partner with a vendor having significant offshore presence.” In fact, America’s second-largest bank JPMorgan Chase plans to increase its outsourcing to India by 25% this year.
Aside from banks, the fund industry is also expected to tap outsourcing. “The fund industry should expect a burst of consolidation and outsourcing of non-core functions in the immediate future,” says Jose Placido, chief executive of RBC Dexia Investor Services.
Offshore providers should also look into the newspaper industry, as U.S. and U.K.-based newspapers increasingly view outsourcing as a “survival tool”. Enterprise Innovation reports: “The global print newspaper industry has shown varying growth trends over the last few years. While Asian economies are registering a growth in consumption, due to rising literacy levels, the US and European economies are witnessing a secular downward trend in newspaper circulation over the last three years.
There has been an increasing trend of US-based newspaper publishers’ offshoring to India along with sporadic instances amongst UK-based publishers over the last couple of years.”
There is also strong demand for IT outsourcing. “Despite the current economic environment, IT spending in the asset finance industry remains strong. Although this may seem to contradict the recent news of frozen financing in the consumer and business sectors, IT gained a greater share of operating budgets as companies look to compete globally, improve customer relationships and operate more efficiently. In asset finance, new technological capabilities coupled with gradually strengthened market demand has led to greater strides in the application of IT services and the outsourcing of processes,” says Cameron Krueger of FSO Knowledge Xchange.
Author: Kim G.