The Outsourcing Week in Review: Tuesday, April 25, 2023

Welcome to Inside Outsourcing: The Outsourcing Week in Review

THE WEEK IN REVIEW

Got 5 minutes to spare? Spend it with us at Inside Outsourcing! It’s the best bang for your 5-min-buck! This week’s recap includes the highs and lows of BPO spending and how countries prepare for a highly digital workforce. Enjoy!

Global IT and Business Process Outsourcing (BPO) spending fell eight per cent to US$24.1 billion in Q1 2023 due to a decline in demand for traditional IT services, such as infrastructure and application development. Information Services Group (ISG) President Steve Hall called this slump a “tale of two markets” as the annual contract value (ACV) for managed services reached an all-time quarterly high of US$9.8 billion, while cloud services dropped by 13% to US$14.3 billion. While ISG expects the decline to last through Q2, Hall is confident that the demand will start picking up in the second half of 2023.

The lower spending can be felt all the way to Europe, where BPO services fell 30% to US$750 million year-on-year (YoY). ISG’s Hall said that more companies are becoming vigilant about their contracts. Enterprises are revisiting cost optimization, efficiency gains, and vendor consolidation deals to save costs in today’s economic climate. In contrast, business services in the Asia Pacific (APAC) rose 32% to US$182 million, with Australia and New Zealand (ANZ) generating the best quarterly performances in the quarter. Overall, APAC outsourcing contracts exceeded US$4 billion again after four straight quarters of declining results.

Jumping to the Middle East, Saudi Arabia’s BPO industry is expected to reach US$5.7 billion by 2027 with a compound annual growth rate (CAGR) of 10%. According to joint research by Boston Consulting Group (BCG) and the non-profit organization Forward MENA, the Kingdom is becoming a “hot spot” and “strategic hub” for outsourced value chains and talent. BCG Managing Director and Senior Partner Leila Hoteit added that programs and projects within the Saudi Vision 2030 “all point towards vast outsourcing opportunities in the years to come.”

Meanwhile, Jamaica is preparing for the increased use of Artificial Intelligence (AI) in the outsourcing sector. Global Services Association of Jamaica (GSAJ) President Gloria Henry said they are now looking for opportunities to exploit AI to help augment Jamaica’s transformation services and boost the country as a preferred outsourcing destination.

Nigerian Governor Babajide Sanwo-Olu puts Lagos State’s digital technology and innovation in the limelight during the U.S.-Nigeria Council in Washington, D.C. In his speech, Sanwo-Olu said the city is the “right place for investments” in FinTech, EdTech, Health-Tech, BPO, talent training and placement, and data centers due to its market, talent, infrastructure, and enabling environment. The governor also called Lagos the “Fintech Capital of Africa” after four of Africa’s seven unicorn companies, worth US$7.5 billion, originated from the city.

Global outsourcing giant Accenture is partnering with software firm Conga to help businesses and organizations optimize their lifecycle management. Accenture Senior MD and Ecosystem & Growth Lead Michael Heald said that managing and predicting revenue — especially during constant global instability — is essential for organizations to stay competitive in their pricing and sales operation. With Conga’s expertise in revenue lifecycle management solutions and Accenture’s focus on various industries, both companies could aid organizations in improving their operational efficiencies.

Meanwhile, Accenture is taking measure to right-size its workforce of the challenging environment ahead. According to reports, the firm is delaying the start dates of recent hires to “recalibrate its massive workforce for a cost-conscious environment.” An Accenture recruiter said the decision was made “to create the best possible new joiner experience.” However, some new hires have reportedly moved on to the new job instead of waiting after their start dates were delayed twice or thrice. Last month, Accenture announced plans to eliminate 19,000 jobs over the next 18 months to lower their FY2024 costs and beyond.

Maybe we will see more people try their hand at freelancing. Nearly half, or 46%, of freelancers worldwide experienced an increased demand for their services in Q1. According to financial services firm Payoneer, most requests came from growing digital businesses. Monique Avila, Payoneer’s Country Manager for the Philippines, said that more businesses rely on freelancers for “convenience, flexibility, and outstanding quality of work.”

Good work pays!

Tuesday, April 25, 2023

NEWS THIS WEEK

19  April 2023

• Europe’s BPO services drop 30% in Q1 – read article…
• BPO contracts in APAC up 32% in Q1  – read article…
• Short videos, AI tools on the rise among businesses – read article…
• Employees prefer 4-day office vs. 5-day hybrid setup — survey – read article…
• Apple joins big-tech layoffs – read article…

18 April 2023

• Accenture delays onboardings amid layoffs – read article…
• Lagos State governor highlights city’s digital sector – read article…
• Shadow Factory adopts ‘Work from Metaverse’ policy – read article…
• 86% of U.S. recruiters value AI expertise vs. college degree – read article…
• ​U.S. firms spend up to $97K to relocate employees – read article…

Read more Inside Outsourcing Newsletters here:

1. The Outsourcing Week in Review: April 20, 2023
2. The Outsourcing Week in Review: April 27, 2023