Here are several
challenges that Aussie SME outsourcers may face in 2013.
Outsourcing Decline
NASSCOM scaled down market growth expectations for the Indian IT outsourcing sector from 14% to 11% for 2012 to 2013. Aussie SMEs need to check the financial health of their outsourcing destination. The service provider must be able to overcome their local economic downturn to sustain a partnership.
Outsourcing Regulations
Overseas, economic crises and political changes may affect current outsourcing laws. Locally, outsourcing regulations may become a possibility as Australia copes with job cuts from declining sectors and increased offshoring activity in the SME sector. There's also the Asian Century white paper which urges the country to utilize business opportunities in Asia.
National Interest
The Aussie SME sector grew by using outsourcing to propel their businesses, but much of the focus is on large corporations that moved jobs and operations overseas. Outsourcing seems more like a hack job than a business strategy. Businesses that want to outsource may face scrutiny from their community. The Asian Century white paper will most likely be the central theme for the coming election and place outsourcing under the microscope.
Sourcing Strategy
There are different sourcing models that have appeared as client needs and expectations changed.
Offshore or nearshore? The former provides labour arbitrage and global competitiveness, while the latter has cultural and geographic advantages.
Single source or multi-source? Multi-sourcing leverages economies of scale, but it's very challenging to manage multiple vendors. Single sourcing is easier to manage, but one-stop shops don't always have the capabilities of niche service providers.
Long-term or short term? Longer-term contracts are beneficial for SMEs which need a partner to become a market leader, but they need tight governance. Short-term contracts are ideal for projects but do not provide enough time to lay the groundwork for transformational goals.
Vested outsourcing? This new hybrid business model revolves around a shared outcome, instead of the traditional win-lose outsourcing relationship.
Emerging Economies
New regions are shaping up to take advantage of the outsourcing boom. Service providers all want a bite out of the global market share. While competition is good for the buyer, challenges such as work culture, government policies, tax requirements, political and economic issues, and other regional factors must be considered.
Demand for Partnership
Offshoring has become more complex, enabling Aussie SMEs to tap global talent and international markets. This requires a strong partnership to withstand changes and sustain a lucrative deal. It's not about relieving tasks any more. It's extending your geographic reach.
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