IT Outsourcing in 2011 – The Best of Predictions

Happy New Year! I’m not one to do predictions, which is why I haven’t played soothsayer yet when it comes to the outsourcing market. But I do follow analysts and experts who come up with predictions lists, and here’s my wrap-up of those IT outsourcing predictions I think are the best.

1.    Expect to see some kind of merger or acquisition between an Indian outsourcing firm and Western one. According to Burnt Oak Partners’ Jean Louis Bravard, one of the Top 5 Indian pure plays will make a significant acquisition of a European player. HfS Research Ltd. has a similar prediction, saying in its list of 2011 outsourcing predictions that “several Indian providers are trying to be more like the Western providers, and the smart Western providers have studied the Indians who’ve been eating their lunch, and are working out a game-plan to win back lost business.” This cross-pollination of cultures will lead to what HfS says will be the mega-merger between a major Indian services provider and one of the Western incumbents.

2.    Innovation will be the game changer. So says XMG Global, an ICT research and advisory firm, which included this nugget of wisdom in its 2011 predictions for the Asia Pacific region. (By the way, even though this is a prediction for the Asia Pacific region, I’m saying it’s applicable across the world. Really.) What XMG Global notes is that with competition heating up and outsourcing firms exploring ways to add value to their existing services, customers can expect to see more integrated, business-centric outsourcing services and cloud-based solution all aimed at helping customers innovate.

3.    Speaking of the cloud, HfS has a great prediction: “Many CIOs will thrive or fail because of cloud demand from their business function leaders.” So, with pressure on full-blast (thrive or fail?!?), HfS says demand will grow for new IT and business operating models as well as “radically different sourcing mindsets.” Outsourcing providers, take heed.

4.     Mega-deals will rebound (Burnt Oak Partners), IT outsourcing will have a banner year (HfS), and global outsourcing market to bring in $485.26 billion revenue in 2011 (XMG Global).

5.    Finally, my favorite. Onshore and nearshore alternatives will become mainstream. This is from HfS and I think it is spot on! The research firm points to the economic and political pressures that have impacted offshoring, and points to the fact that almost all the providers are investing heavily in Latin American capability (yup, been writing about that a lot lately!), and thus will be highly motivated to drive demand to filltheir capacity.

So there’s a small list, culled from a few research experts. Now, I turn to you… the working experts. What are your 2011 predictions for IT outsourcing?