Outsourcing by Mid-Tier Orgs Experiences Big Growth

Information Services Group (ISG), a provider of market intelligence and advisory services, has published research showing explosive growth in outsourcing by mid-tier organizations, creating more opportunities and new challenges. Most sourcing takes place within the world’s largest organizations where over two-thirds of the top 500 companies in the Forbes Global 2000 list have been outsourcing since before 2008. In contrast, less than 10 percent of the remaining 1500 companies on the list entered into the outsourcing fray between 2008 and 2011.

“Organizations starting on the sourcing journey often don’t know what they don’t know about defining objectives, selecting a provider and managing a relationship,” said Deborah Card, Partner, Research Services at ISG. “This lack of experience presents a risk. At the same time, first-time outsourcing clients can benefit from the lessons already learned in the marketplace, avoiding many potential mistakes.”

However, the new researched showed that over 400 service providers won outsourcing deals with G2000 companies between 2008 and 2011 indicating that the reign of the major players in outsourcing is over.

“Based on discussions with executives, we believe a significant number of mid-tier organizations will enter the sourcing market for the first time over the next 12 to 18 months,” said Card. “To be successful, these clients will need to have an understanding of negotiating techniques and market conditions. The ability to assess offerings in the context of competitive industry dynamics will be especially critical. The growing number of providers reflects a high degree of market complexity. Today’s buyers require fact-based analyses to understand and effectively navigate a broad range of provider strategies, capabilities and options.”