Growth of Global Sourcing Industry, Offshore Centers Continues Apace

In addition, digital services — especially automation, analytics and cloud — are increasingly dominating outsourcing activity, according to Everest Group’s quarterly report on the industry.

sourcing

The global sourcing industry grew 8% in the fourth quarter of fiscal year 2018, with the number of offshore centers (captives) increasing at a steady pace.

In addition, digital services — especially automation, analytics and cloud — are increasingly dominating outsourcing activity, according to Everest Group’s quarterly report on the industry.

Digital services accounted for 74% of all outsourcing transactions during the quarter. The majority (55%) of offshore and nearshore service delivery centers set up in Q4 are focusing on digital services, with 56% of them are supporting automation and 33% analytics services.

According to the report, service providers are more or less convinced that automation tools will improve their efficiency and reduce costs.

“Two key areas of service provider activity in Q4 demonstrate this strong emphasis on digital services,” said H. Karthik, a partner at Everest Group.

“Firstly, service providers such as Accenture, DXC Technology and TCS announced acquisitions of startups to enhance their interactive digital content capabilities. Secondly, several service providers announced innovative partnerships with educational institutions in their attempts to bridge the digital skills gap.”

For example, Accenture announced a partnership with Georgia Institute of Technology, IBM is teaming up with IIT Delhi, and Infosys is joining forces with Cornell.

The number of delivery centers increased by 13% during the quarter. Interestingly, small enterprises are now at the forefront of establishing captives or global in-house centers (GICs) to gain a competitive edge amid worsening skill shortage.

The biggest service buyer is the banking, financial services and insurance (BFSI) sector.

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