November 2008

By Paula Klein

Pundits were hotly debating the fate of the IT outsourcing industry in recent weeks as the impact of the global financial crisis continued to unfold. Some experts were concerned about how severe or how prolonged the effects the economy will be, while others see an upside for outsourcing.

Several Indian firms were taking belt-tightening steps as they reported softer earnings and profits. Outsourcing engagements in the financial services sector are in particular jeopardy as major financial firms are acquired and merge. Market research firm Gartner cut its forecast for 2009 IT services spending, and Forrester says the market is jittery. TPI, an outsourcing data advisory firm, reported that European deals dropped off considerably in the second and third quarters, although the overall fiscal year may still be strong. Many see 2009 as the true indicator of current trends.

A few analysts remain optimistic and see offshore services rebounding once the uncertainty is past. Also encouraging is word that a few megadeals that were already in the pipeline have come to fruition. For instance, Accenture announced a five-year, multimillion-dollar contract with Telstra to maintain the Australian telecom carrier's customer care and billing platform. And, Indian information technology company, NIIT Tech, has signed a multimillion-pound outsourcing contract with British Airways.

Here are some blogs, research reports and resources to help you track ongoing trends:

• The TPI report offers interesting insights.
• A useful blog covering outsourcing topics is available.
• Mark Kobayashi-Hillary, the author of Who Moved My Job?, is director of the National Outsourcing Association, the U.K.'s outsourcing trade association. Read his blog and an article about whether a recession is good for outsourcing.
• Everest Group offers an outsourcing information portal with research, articles and event listings, including an article about the economic impact in the U.S. and Europe that cites many converging factors.