"However," adds Zahler, "this is not because they are misreading client objectives, but because for the most part outsourcing providers have not been able to deliver any meaningful process improvement and innovation."
Some outsourcers did begin offering more flexible terms, says Filippone of HfS Research. "And maybe this is all that buyers really wanted in the first place."
Global Companies Seek Global Support Beyond India
Dispersing the outsourcing portfolio among several geographies is now considered a best practice, whether to reduce geopolitical risk, access new skills or diversity operations. "India no longer is the low-cost location for certain types of services," says Zahler of Pillsbury. "Almost every presentation from a global outsourcing service provider begins with a slide or two identifying their numerous offshore facilities located around the world and the substantial telecommunications network they have developed tying all these delivery centers together in some 'seamless' fashion."
But that strategy has come at a price as newer delivery centers require more mature vendor governance and costly integration.
Nonetheless, points out Pace Harmon's Rutchik, India still holds the majority of the offshore outsourcing market due to is scale, resources, capabilities, and infrastructure.
Off the Mark
The Cloud Comes Down to Earth
Decreased buzz around cloud computing? Hardly. "The hype about cloud computing has not abated; if anything, it has increased," says Pillsbury's Zahler. "Suppliers continue to make a good case that cloud computing does not increase security risks and that meaningful savings can be achieved." Adoption rates, however, may have been more sluggish than expected as the enterprise were slow to establish corporate policies and procedures related to cloud, regulatory questions about privacy and security continued, and big-name cloud providers suffered very public outages.
"Customers will likely continue to identify areas where cloud benefits outweigh cloud risks as economic uncertainty will magnify the cloud benefits," says Jason Krieser, partner with the law firm K&L Gates.
IT Offshore Providers Take Over Infrastructure Outsourcing