| The US economy is vastly involved in most of the | | | | scaled-down internal team would suffice as opposed |
| world economies, and any major slow down might | | | | to an outsourced department. |
| lead to a global recession. Slowing down of US | | | | In the IT industry, operations that will inevitably be |
| economy means that companies ,industries and | | | | scaled down in a time of recession could be the |
| organizations in US that outsource are evaluating the | | | | outsourced operations just as easily as the internal |
| recessionary trends. This might automatically translate | | | | processes. The nature of outsourcing deals might |
| into more interest in offshore outsourcing. Outsourcing | | | | change too. Before, the ‘mega-deal’ has been |
| could be is a strong business proposition in good times, | | | | consigned by many to the outsourcing scrap heap, in |
| and it's an even stronger proposition when bad times | | | | favor of multi-shoring and choosing separate suppliers |
| last. Offshoring will grow over the long term, since it | | | | for each process. |
| drives cost savings. However, this might not be quite | | | | A recession will focus back on to cost as a more |
| so in the short term. | | | | decisive factor in outsourcing (it has been argued that |
| With advert of the outsourcing boom, many IT/ITES | | | | service levels and quality are now more important) and |
| companies have been riding the wave of outsourcing, | | | | therefore having one outsourcing supplier will minimize |
| growing by leaps and bounds. Major low-cost | | | | management, due diligence and supplier selection costs. |
| outsourcing destinations like India, Ireland, South Africa, | | | | Having one supplier should also provide the end user |
| Philippines have benefited from outsourcing, especially | | | | with the outsourcing equivalent of savings achieved by |
| by companies from the USA. It was like the | | | | buying in bulk. |
| outsourcing industry around the world was run as a | | | | There might be reduction in the number of fixed price |
| subsidiary of the US/European economy. However, | | | | contracts in favor of cost per unit, as end-users want |
| since last 6 months, the US economy has undergone | | | | to link the cost of supply with volumes (or reduction in |
| major changes. There has been a severe sub prime | | | | volumes of course!). |
| crisis hitting the economy, with the US dollar value has | | | | According to Forrester group, companies are now |
| depreciated to record levels. | | | | holding back their IT budgets to cut expenses. |
| The credit crunch might have a positive or negative | | | | However, after some time, the companies may |
| effect on the outsourcing industry. Downturn in the US | | | | outsource more of their processes when cutting costs |
| economy plus possible recession means technology | | | | pressurizes them, in case the present recession settles |
| and outsourcing as solutions to the need to slash | | | | to become a mild one. The research group also |
| overheads and minimize any negative impact on the | | | | mentioned that the outsourcing market will rise by 4% |
| bottom line. The truth is that the US economy is at an | | | | in 2008 to $162billion compared to a growth of 6% last |
| unpredictable tipping point. If a very serious recession | | | | year. This is a marginal fall in growth rate for |
| hits, then companies might actually scale back on | | | | outsourcing. There is a general assumption is that |
| outsourcing – this would be the result of service | | | | outsourcing is likely to benefit from the credit crunch, |
| companies having less customers, therefore needing | | | | but at the moment things are highly unpredictable. |
| less service provision and therefore believing that a | | | | |