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Indian ITES players should feel happy as reports suggest the US economic slowdown will increase demand for global services in 2008. But on the down side, the presidential elections next year could delay contract signing. This was revealed by NeoIT, the global management consulting firm in their latest report tracking the services trends for 2008.
It predicts the dollar will continue to weaken so clients should expect to take more aggressive action that will include renegotiation or modification of contracts. Also, the US presidential election will lead to large companies avoiding announcing substantial agreements or employee reduction in 2008, to avoid any potential risk or negative publicity. This could lead to a backlog of unsigned agreements.
Moreover, the green outsourcing movement is expected to pick up momentum next year and move beyond its earlier hype. Service providers will take concrete steps to introduce environmental business practices and reduce their carbon footprint.
Global clients will turn to new countries as inflation and employee turnover in Indian cities like Bangalore and Pune will frustrate them. Talent shortage will push them to Tier-II within India, as well as Latin America, Eastern Europe and Asia. Markets, such as Canada, Brazil, Chile, Costa Rica and Mexico, will be among the new hot spots in providing sourcing solutions. However, the study also predicts moving operations to smaller cities will complicate matters for the clients.
The growing commoditisation of global services will motivate vendors to strongly differentiate themselves. Vendors will focus on re engineering their client processes and emphasising their ability to deliver tangible results.
The report suggests software and IT will remain the strongest segment of services globalisation, but engineering will outpace BPO to become the second largest segment. Meanwhile, finance and accounting market will reach critical mass as processes and pricing become more standardised.
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