BANGALORE: NeoIT, an offshore advisory and management firm, foresees a big growth for offshore outsourcing in 2005. In its annual roundup of predictions for the coming year, neoIT sees increasing acceptance for offshoring as a foregone conclusion for multinational corporations that must keep pace with global competition, global supply and global delivery models. The role of offshore outsourcing will continue to grow in importance as offshoring moves to a corporate “must have” as companies develop more sophisticated global delivery models across IT and multiple business processes. Geographically, India will continue in its leadership role as the supplier role model, with strong growth predicted for secondary markets.

Of all the supplier countries, China and the Philippines are expected to mature most rapidly in 2005, with central Europe, particularly Poland, Czech Republic and Hungary following close behind. “Global sourcing has become a corporate mandate for both leading corporations and global service suppliers,” stated Mr Avinash Vashistha, co-founder and managing partner, neoIT. “2005 will witness a bevy of M&A activity in the supplier market similar to General Electric's recent spin-off of its India BPO unit, and we also predict the emergence of multi-country supplier and delivery models that span the globe from India to China to central Europe. In the client market, US companies will no longer be the dominant buyers as western European firms create strong demand for offshore services.” According to neoIT, offshoring will grow in size and complexity as clients leverage on early lessons. Significant analytical work in addition to data entry and data processing is expected to come.

Despite Gecis' spin-off, the increasing complexity of processes being offshored will lead to more wholly-owned offshore subsidiaries for BPO, often referred to as captive centres. Existing captive shared services centres will become targets for further efficiency and expansion. It predicts that over 40% of offshore initiatives will not yield anticipated savings, scale or risk diversification. The key reason for these disappointments will not be due to supplier capability but buyer preparation and management. Next year, small and medium enterprises will finally be clients for offshoring as they weigh the benefits of offshoring due to budget pressures and a more accepting political environment for offshoring, according to neoIT.