Offshoring will undoubtedly continue to grow significantly over the next 3-5 years. Not only are benefits of Offshoring now well proven but it is becoming an essential approach to doing business in many industries. Companies or market segments that have lagged so far in offshoring will increasingly start leveraging it in future.
While the demand for Offshoring grows, on the supply side we are likely to see a shakeout happening. The consolidation and segmentation that we have seen in the IT providers over the past 10 years is likely to happen among the BPO providers as well. There will be an increasing dispersion in the industry. Successful, large players will continue to grow. However, small players without a differentiated proposition will find it difficult to scale up.
Captives despite the prophecies of doom and gloom will continue to be a relevant part of the industry. They will integrate even more deeply within their global organizations and increasingly try to move up the value chain. Like the BPO providers, there will be increasing dispersion in the Captives space as well. Those who are able to play a key role in core/IP driven functions and drive innovation will emerge as a source of competitive advantage for their organizations. Those who don’t will struggle to remain relevant.
Organizations will increasingly look to diversify their offshore footprint and reduce their reliance on India. There will be intense competition among new offshore locations across the world. Some of them will emerge as valuable nearshore or niche locations. However, their scale up potential is limited. India, despite the increased thrust on diversified global footprint is likely to remain the dominant offshore hub given the depth of the talent pool and maturity of the industry.
