As printed in the current issue of Business Trends Quarterly

The sourcing industry is dramatically reshaping itself.  Experienced purchasers of outsourced services may feel that they know the marketplace fairly well. However, the marketplace is changing and the playing field is becoming ever more level.  As long as markets stay moderate to strong over the next twelve months, expect to see the outsourcing market change as a result of growth strategies.

Growth of profitability through labor arbitrage will extend to every organization, not just outsource providers.  As we move through 2006, we already see US-based suppliers lowering their operating costs by leveraging offshore resources to provide their own G&A functions. This trend will extend to all $1B+ organizations as offshore, captive shared service centers become a viable alternative to outsourcing. This strategy is well established and should be given equal weight with outsourcing when organizations consider any sort of internal restructuring or process optimization.

Growth through mergers and acquisitions among the global suppliers is certainly a possibility.  And it could have wide-felt repercussions on the industry.  Not only could the resulting supplier be a "giant among giants,” but there would also be one less competitor in the bidding process, changing the already increasing use of the selective pursuit strategy. In such an environment, buyers could be faced with a more limited set of major suppliers and be forced to consider abandoning the commodity-like procurement process in order to have any real form of competition.

Growth of Indian firms will reverse the migration back to India. Infosys, TCS and Wipro have significantly moved up the value-chain with rapid advances in delivering complex services. To sustain their current growth rates, these firms have become experts in recruiting. Walk the campus of Infosys in Bangalore and you’ll begin to see the attraction. Prediction: India-based suppliers will not only continue to grow, but will begin acquiring talent from US and European suppliers.

The rate of growth will affect the rate of change. Be prepared to change with the times.

For the complete article including a panel discussion of outsourcing visionaries, please click on this link: http://www.btquarterly.com where the article can be found on page 76.