Sourcing center setups at all-time high in Q2, driven by increased location activity in Nearshore Europe, Middle East
The global sourcing industry experienced a lucrative Q2 2018, marking notable rises in outsourcing demand, setups of global in-house centers (GICs) and service provider revenues compared to Q1, according to Everest Group. In addition, Everest Group reports that overall location activity was at an all-time high (87 setups of delivery centers by GICs and service providers during the quarter) due to significant increases in Central and Eastern Europe (CEE) and the Middle East.
Everest Group discusses these and other second-quarter developments in the sourcing industry in its recently released Market Vista™: Q3 2018 report. The quarterly report highlights the trends in the fast-evolving global sourcing market, exploring the key developments across outsourcing transactions and Global In-house Centers (GICs), as well as location risks and opportunities, and service provider developments.
“We’re coming off a great second quarter for the global services industry as a whole,” said Salil Dani, vice president at Everest Group. “For starters, location activity was at an all-time high and transaction activity rose in comparison to Q1. More than two dozen of the world’s leading companies announced plans to expand or set up new centers, which is a strong indication that enterprises anticipate that the market will continue to validate their sourcing strategies in the near future. We expect that this positive momentum will continue through the remainder of the year, which suggests the global sourcing industry will post significantly improved metrics compared to 2017.”
Everest Group will review the findings of the “Market Vista: Q3 2018” report in a webinar to be held on Wednesday, August 29, at 9 am CDT. In addition, Everest Group presenters will address the results of a brief survey the firm recently conducted with leading service providers to gauge their market perspectives for the remainder of 2018 and into 2019. Register here for the complimentary, 60-minute webinar, “Service Provider Vantage Point, Plus Q3 2018 Market Vista™ Briefing.”
Additional highlights from the Market Vista: Q3 2018 report:
***Download a complimentary 14-page abstract of the report findings here.*** (Registration required.)
Asia remains the most cost effective destination for application outsourcing services; however, currency depreciation has effectively lowered the cost of delivery from Central Eastern Europe and Latin America
Annual operating cost for IT-ADM services varies significantly among locations in nearshore Europe
Locations in nearshore Europe offer a unique value proposition for the delivery of IT services, including cost arbitrage, favorable location & connectivity, lingual and cultural affinity, quality talent availability, and a favorable business climate and access.
Central and Eastern Europe Delivery Center Operating Costs
The offshore F&A services sector in Central & Eastern Europe (CEE)
Central & Eastern Europe arbitrage expected to decline but remain significant through 2018 (compared with source locations in Western Europe)
F&A service delivery centers in Central & Eastern Europe have a lot to offer, but value and services vary in established and emerging locations