Demand for Outsourcing Steady in Q2, but Nature of Demand is Changing Significantly | Press Release

Anti-incumbency, shorter deals, emerging markets and disruptive technologies are on the rise and reshaping the future of global services.

DALLAS, Sept. 3, 2014 — On the surface, the demand for global services remained steady in the second quarter of 2014, suggesting the market is stable. However, a newly released report from Everest Group suggests that, beneath the surface, the nature of that demand is shifting significantly, creating currents of change for the outsourcing industry.

Among the trends expected to shape the market outlook for the remainder of the year are the following:

  • A strong “anti-incumbency” sentiment among buyers, particularly with respect to technology and business process outsourcing
  • Shorter deal duration as buyers exercise a preference to unbundle IT services
  • Increasing traction from emerging markets in industries such as insurance, oil and gas, and manufacturing
  • Increasing adoption of disruptive technologies such as cloud, mobility, analytics, and robotic automation

These findings and more are discussed in the report, Market Vista™ Q2 2014. The Market Vista Q2 2014 report provides data and analysis highlighting the key trends and developments in the fast-evolving global offshoring and outsourcing market.

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“In the first half of 2014, the competitive intensity of the global outsourcing industry took its toll on some leading providers, as they lost market share to specialists in vertical markets such as insurance, manufacturing and healthcare,” said Salil Dani, practice director at Everest Group. “We expect this competitive intensity to continue, with an anti-incumbency sentiment fueled by factors such as underwhelming service delivery, an anticipation of next generation needs by sophisticated buyers, a preference to unbundle IT services and aggressive service provider investments to absorb switching costs.

“From a locations perspective,” Dani continued, “we expect activity to remain high for the remainder of 2014, spurred by growth in Latin America and increased usage of tier-2 cities in Asia and additional onshore investments by Indian-heritage service providers.”

Download Publication-Quality Graphics

High-resolution graphics illustrating the report’s key takeaways can be included in news coverage, with attribution to Everest Group. Graphics include:

  • ITO continues to gain share of total outsourcing market
  • Share of renewals/restructured deals in outsourcing declining over time
  • ITO services arbitrage sustainability in Chile
  • Operating cost per FTE in Latin America is 25 percent to 60 percent of U.S. tier-2 cities.

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