Demand for Outsourcing Growing Slowly – EquaTerra


According to EquaTerra 4Q 2006 Outsourcing Pulse Surveys, the demand for outsourcing in the BPO and ITO market is growing at a slower pace as compared to the growing rate of earlier years. The organization reported that there has been a decrease of about 13 percent in the last quarter of 2006 as compared to 3Q 2006 and 4Q 2005.

Among the key findings, the non-traditional functions, such as document and imaging services, legal processing, knowledge process, and logistics services outsourcing increasingly depends on both supply and demand. Also, there has been an increase in the multi-provider outsourcing that allows the client to have the best for each of its process. However, the multiple services provider model can be ranked as complicated as well as expensive as compared to outsourcing services to the single services provider.

In addition, most of the clients outsourcing their processes underestimate the cost and complexity related issues while performing Outsourcing Management and Governance (OM/G) activities, including the governance organization’s staffing, the costs related to the third-party services, such as lawyers, advisors, etc., and the costs related to the software support for OM/G activities. The above mentioned reasons are often considered as one of the root causes for problems related to outsourcing.

According to Stan Lepeak, Managing Director – Research, EquaTerra, most of the outsourcing contracts awarded during the late 1990s and early 2000s were not structured properly, which used to create problems either for the service providers or clients.