Financial Crisis and Outsourcing

While I fully appreciate that the flavor of the month is to hail the financial crisis as catalytical to the growth of LPO, I read an extremely interesting interview on the Shared Services and Outsourcing Network’s site, discussing the impact the crisis will have on the entire outsourcing sector. Although the interview is probably a few weeks old now, it still makes for an interesting discussion.

The experts on the panel interview, conducted by Jamie Liddell, online editor of SSON, included, among others, Charles Aird, Senior Managing Director of Outsourcing/Shared Services & Offshoring at PricewaterhouseCoopers; Brian D. Smith, Partner & Managing Director, Financial Services at TPI; and Dr. Thomas Tunstall, Advisory Liaison at ACS.

Click here to read the full interview. I have paraphrased below some of the major points to emerge from the discussions:

• There may be an initial downturn or at least a slowdown in discretionary activity in the short term.

• This lull will be followed by a large amount of activity in the coming years.

• There may be a trend to move away from India.

• There will be a slowdown in the trend to captives.

• Both the weakness in the global economy, and the possible movement away, could have a positive impact and feed through to lower wage inflation in India.

• On the ITO side, India will remain the clear market leader. In the BPO arena, we will see more variety, and different countries emerging.