Outsourcing boom predicted in 2008

A weak global economy and the need for businesses to cut costs are predicted to drive outsourcing growth up in 2008.

More than half (53 per cent) of companies plan to increase outsourcing spending in 2008, up from 38 per cent in 2006 and 48 per cent in 2007, according to a survey of 250 IT professionals by US-based outsourcing and business process outsourcing (BPO) company Syntel.

Bharat Desai, CEO of Syntel, said outsourcing is one industry that will not suffer from the crisis in the credit markets.

Desai said in a statement: "In a weak or uncertain economy, companies look for technology solutions that will increase productivity, efficiency and savings."

The link between outsourcing and savings was reinforced by a separate study by BPO provider Sutherland Global Services, which found cost reduction and the ability to provide a variable cost model was in the top five reasons for outsourcing for more than 90 per cent of businesses it questioned.

The study of BPO trends for 2007 surveyed major global companies in the insurance, banking, telecom, retail and banking industries. It found that tech support and customer care departments continue to be the most commonly outsourced divisions, standing at more than 60 per cent and 40 per cent respectively, and that India and the USA are the most popular locations, chosen by about 70 per cent and 60 per cent of respondents.

Data and site security topped the list of what companies want from their outsourcers for 80 per cent of businesses, with an understanding of process and industry experience close behind.