Introduction

The value proposition for global sourcing has strengthened and evolved over the past few years for both IT and BPO transactions. Although labor arbitrage is still a primary consideration, buyers are now receiving enhanced value through factors such as quality, productivity and timeliness. This report provides an overview of the global sourcing and offshoring industry and provides insights, detailed analyses and implications for stakeholders. The research examines the offshore market from multiple dimensions, including by industry market size, buyer adoption, supplier developments, savings, billing rates, supplier margins, locations, and risks. This report will assist companies considering offshoring services to a third-party or suppliers of outsourcing understand in detail how the value proposition for global sourcing has evolved to date and is changing in the future.

Scope

• Analysis includes all IT outsourcing contracts with a Total Contract Value (TCV) of US$20 million or greater
• Analysis includes all BPO contracts, regardless of size
• This report is applicable to all geographies and industries
• This report is applicable to both buyer and supplier organizations 
  

Contents

This report summarizes key market trends and insights to assist management in making more informed business decisions relative to global sourcing. Key Insights are divided into seven categories: offshore market overview, buyer adoption, supplier developments, savings, billing rates and supplier margins, location optimization and risks/case studies. Each category is further sub-divided to provide a holistic view of the area from a historical, current, and future perspective. For example, in the case of buyer adoption, a few of the key messages include:

• Globally, only a handful of companies, typically very large global corporations (over 2,000 FTEs), are offshoring in a significant way
• The financial services industry is the biggest contributor to the offshore market, but telecom & hi-tech, and healthcare & pharmaceuticals, have higher penetration
• From an activity perspective, IT ADM is offshored most often, with call centers and FAO the preferred BPO activities to offshore
• Multiple offshore models are in use today, with many companies utilizing different models for different services. While use of third-party suppliers dominates offshore IT services, captives are the preferred route for offshoring BPO

The report uses case examples to better illustrate concepts and provides implications for both buyers and suppliers as to how to best capitalize on the global sourcing trends of the future.