What's in store in 2007?

Predictions are always risky but there's something about the New Year that sees people engage in such rashness, and I figure I will join that group.

Looking forward to the sourcing market in 2007, what are some things that we can reasonably expect to see?

Increased activity in a number of countries

• Australia and New Zealand are likely to continue their trend of a significant volume of business given the maturity of the markets in those countries resulting in both renewals and additional new entrants.
• Japan will experience a increased number of renewals given the natural expiration of a number of previously signed deals. The question, as posed previously, is will Japan also see an increase in the number of new sourcing arrangements.
• India has started to mature as a market for sourcing deals – this is from the perspective of Indian firms entering sourcing relationships, not from the perspective of Indian firms being service providers outside of India – and will continue on that path.
• Singapore, Malaysia, Thailand and Philippines are countries showing signs of increased activity and I’m aware of a number of potentials in all of them.
• South Korea seems to have gone a bit quiet and that may continue through 2007.
• China is likely to be more of a service provider base than a market on its own during 2007 but like India will eventually start to mature as a market for sourcing deals.

Increased competition among countries to be offshore destinations

• India will continue to garner a large volume of attention and business given its astounding demographics.
• China will continue to increase its level of attention and business and will likely start to feel the middle management squeeze that has been evident in India for some time.
• Malaysia, Thailand and Philippines will continue to work to attract additional business in focused areas.
• Singapore will continue to attract companies in specific areas, especially where the lowest labour cost is not the primary driver.
• Vietnam may start to emerge as a destination for ITO and BPO, especially as the level of English continues to improve.
• Australia and New Zealand will continue to promote themselves as offshore destinations, primarily for US and European markets.

Increased diversity of client maturity

• As new clients enter the market at the same time as some clients are passing the 10 year mark of outsourcing and in some cases offshore experience, the level of expectations and ability will cover a broad range challenging both service providers and external advisors.

As the year progresses, we'll track market changes to see if they reflect the above and revisit this topic periodically in this blog.