Today's blog comes from Peter Allen, Partner and Managing Director, TPI.
There's no shortage of market commentary relating to the current global financial crisis. But, let me add to the list.
For most people, the effects of the recession are being measured by dramatic declines in the world's equity markets. That is, the values of publicly-traded stocks are held as the paramount barometer of the economic situation. Underlying the crumbling valuation of equities is the virtual disappearance of commercial credit. Borrowing money has become a nearly impossible feat.
So what effect will this constriction on available capital have on the global outsourcing industry?
Foremost, companies are limited in their access to investment capital, which will diminish the in-house systems integration and applications development work around building new capabilities.
And that's why the make-versus-buy debate is likely to swing hard towards the buy-side of the deliberation. If there's a service alternative in the market that allows a company to forego the outlay of precious capital, I think that there's an increasing appetite to go that direction.
So that implies an increased demand for outsourcing, right?
Sort of. To me, the current market conditions foment the perfect scenario to allow for adoption of standardized services. But that's outsourcing. If you look back over the past two decades, you'd find that it's an industry that's converging to the promise of standardized, leveraged services.
I am excited for the opportunity. Service providers will focus on delivering the power of leverage through standardized offerings while their clients are much more receptive to buying an off-the-shelf solution in the current market. They finally understand that the perpetuation of customized solutions seriously constrains the ability to flex.
Companies are looking to the outsourcing industry to help weather the lousy capital market conditions. At the other end, the service providers positioned to deliver standardized solutions are in the best position to win.
In the current financial crisis there's no shortage of opportunity to right the ship.
