Virtual Assistant Business Outsourcing

Two Recent Articles Offer Very Different Perspectives On The Current State Of Outsourcing

Do you ever get frustrated by media reports that are often conflicting and contradictory?  A good example of this is two articles about the state of the outsourcing industry that were published last week.  It’s no wonder that people become confused and have misconceptions about outsourcing because of all the conflicting information out there.

On the one hand, there is the February 2, 2009 article published by BusinessWeek.Com titled “Outsourcing Gets Crimped by Recession”.

 

On the other hand is an article published the very next day by NetworkWorld.Com titled “Outsourcing on the Rise”

Scale Back?

The negative article in BusinessWeek.Com has a subtitle that reads “Discretionary IT projects are getting the ax as companies review costs, hurting sales and growth for outsourcing providers”.  The article goes on to say “The economic slump has become so pronounced that even outsourcing is getting scaled back. Executives who once relied on outside firms to handle certain IT tasks to cut costs are now reining in some outsourcing plans on concern they’re too expensive.”

Much of the rest of the article are different companies stating that they are reconsidering using outsourcing in light of the global economic crisis.  For instance, Peter Allen, partner and managing director of the sourcing advisory firm Technology Partners International says “We’ve been in a soft outsourcing market for arguably six months.”  Allen said that he doesn’t expect that to change for the next 3 to 6 months.

The article goes on to relate how many outsourcing specialists (unnamed) feel that the current slump will last longer than the dot-com bust earlier this decade.  They use statistics from the first half of 2008 compared to the second half of 2008 to make their argument.  The first half included outsourcing mega deals worth $17 billion while the second half of 2008 had mega deals worth only $6.5 billion.  TPI’s Allen states "Unlike 2001, when there was only one dampened half-year performance, we might see an extended slowdown through the first half of 2009."  The article concludes with more gloomy outsourcing predictions for the future.

Increase Outsourcing to Cut Cost

The other article, “Outsourcing on the Rise” gives a completely different perspective on the subject.  This article begins on a more upbeat note: “Amidst the slowdown, some companies are outsourcing some of their IT needs as a cost-cutting strategy or a means of focusing on their core business. In fact, in 2008, about 76% of announced outsourcing contracts represented new deals.”

This news story features information from a new Gartner report on outsourcing.  The report illustrates that existing outsourcing clients are not abandoning outsourcing, but they are looking to increase efficiency and reduce costs in their contracts.  The Gartner report stresses that flexibility among outsourcing providers is vital to maintain and grow their client base.

Ben Ping, research vice president at Gartner predicts “During the next five to seven years, a broad set of new and alternative IT delivery models – already in use by aggressive early technology adopter organizations – will become mainstream.”  Ping concludes by stating “Market excitement over new delivery methods is intensifying and whetting buyers’ appetites for new options and services that promise greater flexibility, speed-to-solution, lowered capital investment, and pay-for-use models.”

Author’s Thoughts

So, who to believe?  Well, common sense for one.  In this depressed economy where all businesses, small and large, are looking to reduce their operating costs, it’s seems very narrow-minded to think that the outsourcing of business processes will decline.  In fact, as more individuals realize the flexibility and savings that offshore outsourcing offers, it will most assuredly continue to grow in the near future.