With the competition for offshoring and outsourcing heating up, we thought it might be a good time to look at the future of offshoring and outsourcing.
Last week we look at the trends we believe will impact the future of work completed offshore.
Taking these trends into account, we put down our thoughts on what these trends actually mean for Australian accounting compliance.
1.With low barriers to entry in the Offshoring world, there will continue to be new “Entrepreneurs” moving into the market. These new players will offer the world, though a decent due diligence will sort out the “wheat from the chaff”
2.Offshoring, or access to cheap inexperienced labour, will continue to be the battle between the Philippines and India. India has a lot of people and multiple large outsourcing destinations, and has been in the BPO game a lot longer than the new contender Philippines. The Philippines, while late to the game, is the current darling for Australian accountants who are late to entry and seeking cheap inexperienced labour. We see this market continuing to be a “dog eat dog” market, with the expectation that labour will continue in a “race to the bottom” for the cheapest offerings.
3.Given the ease of market entry, pressure will continue to be on offshoring firms. This means offshore firms will be working hard at both ends – facing stiff competition on pricing, having to pay staff top dollar to retain them, and having to invest huge resources in selling and marketing.
4.Offshore firms will have to spread themselves thin to get bulked up. We’ve already seem Australian focused accounting compliance offshoring firms expand their service offerings out to include admin/marketing/IT/Sales staff, and expand their geographic areas out to include other English speaking countries.
5.For those offshoring firms that have moved to specializing in supply of offshore resources, there will be large market forces pressuring them to move away from their specialization.
6.Given the non-existent investments in systems by offshore firms, we believe offshoring firms will have little hope of competing with Outsourcing firms. Instead they’ll try to obfuscate the difference between offshoring and outsourcing, frequently calling themselves outsourcing firms when they are actually offshore firms.
7.Outsourcing, or the provision of highly trained resources as an alternate, will continue. There will be a premium paid to outsource providers who can continue to meet the demand for high quality work and a high quality labour force. For those providers that have invested time, money and effort into creating a homogeneous workforce and homogeneous systems, then there will be less competition at this end of the town.
8.Outsourcing firms will continue to be in the best position to dominate future trends, especially with their investment in a homogeneous well trained workforce.
What are your forecasts for the Outsourcing / Offshoring “Firm of the Future”?