9. IT Outsourcers Embrace Riskier Models Pricing pressures will continue to squeeze provider margins, especially offshore. To support growth and profitability, vendors will have to consider innovative -- and risky -- engagement models such as joint ventures including customer-specific innovation labs and dedicated centers of excellence, according to Everest Group.
10. Application Development Migrates Stateside
Financial services firms, for example, have provisioned the maintenance of scores of lines of code from offshore providers in the last decade. But in 2012, they may begin to question the offshore model. "There will be a retraction in application maintenance outsourcing going offshore as big financial services firms finally recognize how to merge quality and cost metrics," says Michael Engel, managing partner, HfS Consulting at HfS Research. Next year, they will discover that it's actually cheaper to do the work in secondary U.S. cities either via a third-party or their own captive centers, Engel says.
11. IT Security Takes Center Stage Sometime in the next year, a large IT service provider is going to be humiliated by a public hack of a client's systems, predicts Ruckman of Sanda Partners. "2012 will be the year of security," he says. "[Outsourcing] companies are going to look for new and better ways to protect their data and [that of] their customers.
12. Global Companies Seek Global Support Beyond India More large companies will seek to diversify their back-office footprint, not to save money but to access local knowledge and language skills to support their offshore operations benefitting providers with delivery centers in such countries as Brazil, Malaysia, Mexico, South Africa, Romania, Bulgaria, says Fersht of HfS Research. "India will not lose business but rate of growth will slow."
Stephanie Overby is regular contributor to CIO.com's IT Outsourcing section.
Read more about outsourcing in CIO's Outsourcing Drilldown.
