Bright spots in global sourcing for Q4 include GIC setups, Middle East and Africa locations, digital services, and service provider revenues
Everest Group reports that the global sourcing industry posted a 5% decline in outsourcing transaction activity for Q4 2019, culminating a year of steadily declining quarterly transactions that resulted in a year-on-year drop of 3% between 2018 and 2019. However, Q4 2019 did have some bright spots: global in-house center (GIC) setups increased in Q4, as did acquisition and alliance activity, and both global service providers and offshore-heritage service providers experienced a bump in revenue for the quarter. Digital services continued to dominate outsourcing activity, driven by cloud-based deals.
“We continue to see that the majority of outsourcing deals include digital services, as opposed to traditional services only,” said H. Karthik, partner at Everest Group. “Seventy percent of outsourcing transactions conducted in fourth quarter 2019 included digital services. Of these, 50% included cloud services. Robotic process automation, artificial intelligence, analytics, mobility and cybersecurity were also prominent features of these deals. Less commonly included but certainly worth noting were other digital services such as IoT, social media, blockchain and digital interactive components.”
Everest Group also identified these Q4 2019 global sourcing trends:
- Cloud demand in the retail and consumer product goods (CPG) sector increased as enterprises looked to enhance omnichannel customer experiences by leveraging cloud technologies.
- GIC setup activity increased across both offshore/nearshore and onshore locations, largely driven by the manufacturing sector.
- The Middle East and Africa (MEA) region witnessed a jump in activity, primarily driven by growth in engineering-focused GIC setups.
- Center setups activity rose in tier-2/3 locations as both GICs and service providers are increasingly exploring smaller cities, especially in mature markets such as India, Ireland and Poland.
- Service providers announced numerous acquisitions and partnerships to enhance their IoT offerings and partnered with third parties to strengthen their mobility capabilities.
- These developments in the fast-evolving outsourcing market are detailed in Everest Group’s recently released Market Vista™: Q1 2020 report. The report includes an analysis of outsourcing transaction trends, health of
- GICs, location risks and opportunities, and service provider developments. A special section is devoted to outsourcing activity in the engineering/R&D space, with a focus on Verification & Validation (V&V) activities.
***Download a complimentary abstract of the report***
Complimentary Webinar: The 5 Most Important Global Services Trends in 2020
Everest Group is delivering a complimentary webinar on what lies ahead for the global services industry. The webinar, “The 5 Most Important Global Services Trends in 2020,” will be delivered on Thursday, March 5, at 9 am CST (10 am EST; 3 pm GMT; 8:30 pm IST). Everest Group hosts Michel Janssen, chief research guru, and H. Karthik, partner, will preview the firm’s upcoming Market Vista™ Annual Report 2020, sharing likely trends for 2020 and the keys to success in the context of rising uncertainty.
***Register for complimentary webinar***
About Everest Group
Everest Group is a consulting and research firm focused on strategic IT, business services, engineering services, and sourcing. We are trusted advisors to senior executives of leading enterprises, providers, and investors. Our firm helps clients improve operational and financial performance through a hands-on process that supports them in making well-informed decisions that deliver high-impact results and achieve sustained value. Our insight and guidance empowers clients to improve organizational efficiency, effectiveness, agility and responsiveness. What sets Everest Group apart is the integration of deep sourcing knowledge, problem-solving skills and original research. Details and in-depth content are available at http://www.everestgrp.com.
