It has been a constantly shifting and unpredictable year for outsourcing services worldwide, and we anticipate business challenges to persist into the future. Service providers need to sustainably execute price increases at a pace that matches wage hikes to avoid a material drop in margins.
Service providers currently hold high pricing power that can, and should, be prioritized for better outcomes during price increase discussions. These could include growth focus, customer experience impact, level of unique expertise needed, and more.
Service providers must also determine which locations can expand their talent supply in a market where needed skills are becoming increasingly scarce. Finding the right locations to expand talent supply is likely becoming as important as increasing the price in outsourcing deals.
We’re seeing service providers feel talent and cost inflation pressures in the US, APAC, and Europe, and most are adjusting and refreshing their service delivery location strategies to survive the impending recession.
Our clients have also found that bringing talent back to highly congested tier-1 cities has been an uphill battle, and as a result, many service providers are instead looking to expand their delivery operations into tier-2/3 locations. But with more than 25+ city options available, providers need to know how to select the most strategic tier-2/3 locations for their business.
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