There has been some talk throughout 2016 that the outsourcing industry is shrinking. The latest news is a newly published report form IDC (Global Analysis firm) which took a look at the revenue for the APAC markets (ex Japan) in 2015.
The report makes clear that there is some truth to the notion that the outsourcing market gets a bit more competitive. Total revenues declined by a rather whopping 3.7 % YOY for the traditional outsourcers. A decline of 3.7 % is rather substantial for an industry which had gotten used to continuous growth in revenues.
In another interesting tidbit the report makes clear that the contraction is not just limited to the medium and smaller level providers. Among the Top 10 outsourcing providers revenues declines by about - 1.8 %...better than the overall segment...but never the less a noticeable decline.
The industry is getting hit from a few sides. The cloud and a general trend towards more automation is putting the brakes on the available workload. It has always been argued that the cloud will make corporations more efficient..and it seems that this efficiency gain (meaning less people needed) has finally arrived at the providers of BPO/KPO services as well.
If there is one thing for certain it is that this trend will continue. Consequently one can expect some form of consolidation among industry players to set in .The days of rapid growth might be over.
Not all is lost though. IDC also reports that relative newcomers to the outsourcing market (China and other Southeast Asian countries) are getting bigger share of the pie. As a matter of fact, IDC is expecting compound growth for the industry as a whole of 6.9 % throughout 2020.
As such the report makes clear that it still is all about costs when it comes to outsourcing. Relative newcomers to the market with lower price tags are gaining ground at the expense of the established players.