Predictions tend to be the pastime of fools. As Wilbur Wright admitted in 1908: “I confess that in 1901, I said to my brother Orville that man would not fly for fifty years. Ever since, I have distrusted myself and avoided all predictions.”
As the global economy continues to grapple with uncertainty, corporate decision-makers are trying to play soothsayer. But Globalization Today saved you the trouble of gazing into a crystal ball. For 2011, we again asked many of our thought leaders from IAOP and our strategic advisory board members from around the world to weigh in.
Not to brag, but over the past several years, IAOP pundits have racked up a respectable track record at predicting the trends ahead. Our 2010 predictions that non-committal customers would renegotiate contracts and scoff at long-term decisions proved true, as did forecasts of advanced technology becoming increasingly important. In 2010, we also correctly foretold that Latin America would boom, global hiring rebound and consolidation accelerate.
What you call outsourcing, how and where you procure it, and how you perceive it, could all change in the coming year, according to our forecasters. IAOP’s principals predicted increased political acceptance of outsourcing; sourcing from all shores as well as domestically; an emerging retail model to outsourcing; and companies outsourcing multiple functions with fewer vendors.
The association’s leaders and members from around the world also predicted continued revenue growth; sustained Latin American growth; innovative partnerships and consolidation; new and transformative technology; better risk management; and competition for talent.
Here’s what our prognosticators had to say. Some insights will confirm your instincts, while others will challenge your assumptions. Regardless, you’ll find the following predictions relevant, timely and of practical use.

1. Increased Outsourcing Acceptance
President Barack Obama’s comments in India this November about outsourcing set the stage for potentially creating a more favorable political outlook on outsourcing in the coming year.
Meeting with government and business leaders from both countries this fall, the Democratic president said, “In 2010, trade between our countries is not just a one-way street of American jobs and companies moving to India. It is a dynamic, two-way relationship that is creating jobs, growth and higher living standards in both our countries.”
As the management practice of outsourcing matures and is used widely by organizations across the globe, more people are coming to see outsourcing as “one of the most powerful tools available today for building better companies and better economies,” says IAOP Chairman Michael Corbett.
In fact, “the top 200 companies in the global outsourcing industry employ approximately 4 million people and a full one-third of those jobs are in the U.S.,” says Corbett. ”It’s time for us in developed economies to realize the value of outsourcing and to start investing and competing for a share of the global, multi-trillion dollar outsourcing industry.”

2. A Proliferation of New Sourcing Arrangements
Expect to see a profusion of myriad sourcing arrangements, of a greater number and variety than in the past.
Socio-economic pressures on leading countries — U.S., Britain and Germany — will compel companies to consider onshore outsourcing or center establishments in the same light as offshore outsourcing, predicts IAOP Managing Director of Thought Leadership Jagdish Dalal, a Certified Outsourcing Professional.
Economic incentives provided by local and federal governments for encouraging employment in depressed economic areas will encourage competition with lower rate offshore destinations, said Dalal, president of JDalal Associates, LLC.
“This ‘socio-sourcing’ will extend the definition of rural sourcing as we have been observing for the last several years,” he said.
Domestic outsourcing is projected to gain mainstream visibility with provider firms creating new jobs in the country that will leverage both “work-from-home” concepts and a skilled workforce that’s not mobile in such markets as Michigan, Idaho and Wyoming, predicts IAOP Asia Ambassador Bobby Varanasi, COP, Chairman & CEO of Matryzel Consulting, Inc.
“Also expect to see more rural sourcing as providers become increasingly social conscious and take a more strategic approach of tapping into a ‘trainable’ employee pool where emphasis will be placed on both sustainability and serving the domestic market,” said Varanasi.
No matter where outsourcing work takes place, the bottom line is  “outsourcing is a global phenomenon and companies are working on their own and with their network of providers to leverage the best talent wherever and whenever they need it – they’re looking for solutions, not shores,” says Corbett.
IAOP Strategic Advisory Board Member John Hindle sees the outsourcing industry as moving into a new phase.
“The continued trend toward bundling, driven by clients’ need to rationalize the outsourcing service provider portfolio and by adoption of Global Business Service models, could be described as a shift from outsourcing to sourcing of business services, including information technology,” said Hindle, who also serves as the lead marketer in charge of outsourcing for Accenture.

3. Double-Digit Revenue Growth
In 2010, revenue of outsourcing service providers grew by more than 10 percent, the fastest pace in recent years, according to IAOP’s Global Outsourcing 100 data. This rate of growth will continue in the coming year, the association predicts.
Smarter buyers will return to the market in 2011 with greater confidence in the economy and demand will grow as outsourcing continues to be accepted as a mature business practice, Hindle says.
However, corporate pressure to reduce costs and lower longer term commitment will continue to fuel the current trend of highly competitive bidding for services and shorter duration of contracts, with favorable terms embedded to alter volume of service without re-opening contract negotiations, Dalal predicts.
Julia Santos, COP, director worldwide strategic outsourcing, Johnson & Johnson Group of Consumer Companies, and chair of IAOP’s Global Human Capital Chapter, asserted, “Continued market uncertainties will prompt companies to conserve more cash, pare inventories, streamline staffing and rethink expansion plans.”
Atul Vashistha, COP, IAOP board member and chairman, Neo Advisory & Neo Group, added: “Pricing will remain stable while inflationary pressures are worrying.”

4. Continued Growth in Latin America
IAOP expects the Latin America region to experience a boom in 2011, particularly in Brazil, Mexico, Chile, Colombia, Costa Rica and Peru, which are strategic locations to the U.S. market.
The growth will be largely driven by the attractive mix of cultural and language compatibility, the size and quality of the labor pool, and strong government support for the industry, says Santiago Pinzón Galán, chair of IAOP’s Latin America Regional Advisory Board and Executive Director of the Chamber of BPO&IT at ANDI (National Business Association of Colombia).
“With service providers and outsourcing clients looking for all means to save on costs, geographical proximity as another means to cut travel expenses and minimize remote management risks, the Latin America region joins the ranks for the competition of the growing global outsourcing market,” he says.
But the region will have to address compliance, legal, financial and tax barriers to outsourcing to best succeed, says Santos.
“Political and economic stability of the target country is a very important element in Western companies willingness to invest in offshored or outsourced services,” Santos said. “Issues with violence, tax barriers to offshoring and the red tape involved in offshoring to a particular country could discourage investment.”
Stay tuned for more analysis of this important region, as IAOP and corporate member ANDI host the first The 2011 Latin American Outsourcing Summit May 26-27, 2011, at Las Américas Global Resort and International Convention Center in Cartagena, Colombia.

5. Advances in Practices, Tools and Technology
The trend of companies using advanced management practices, tools and technologies to provide improved value and operational flexibility and performance will continue in 2011, although in this regard the outlook is a bit mixed.
“In outsourcing, advanced technologies will be major game changers impacting productivity and resulting in cost management, and governance and risk compliance,” says Matt Shocklee, COP and IAOP U.S. Ambassador.
Charlie Aird, U.S. Shared Services and Outsourcing Leader for  PricewaterhouseCoopers, said, “Cloud computing will become a major future factor as an IT outsourcing strategy.”
Cloud computing will bring both “simplicity and complexity,” according to Accenture’s Hindle. “It will simplify and standardize the procurement of specific services, but it will also increase the number of providers and complicate the service architecture,” he said. “Buyers will need help integrating new capabilities with legacy systems, and ensuring security and performance in the process.”
Varanasi sees an “explosion of cloud-based business models” emerging as tech companies woo governments, especially in fast growing emerging nations, to adopt new technology-enabled and citizen-centric services.
But technology alone won’t be enough, some IAOP members say.
Varanasi sees less emphasis on technology, with the advent of an increasingly younger workforce in most developing nations.
“The emphasis on technology for the sake of it will reduce sufficiently enough for companies to shift their emphasis on consumer satisfaction to consumer distinctions, where ease of access, flexibility and service-centricity will become a norm,” he said.
IAOP board member Dylan Taylor, Chief Executive Officer, Colliers USA, said, “Technology platforms that manage outsourcing relationships have become more or less ‘table stakes’ and no longer present a competitive advantage.”

6. More “Combo Platters”
If you envision companies as ordering their outsourcing services off a menu, more will be choosing “combo platters” in the coming year. This trend will reflect how they are outsourcing in a more integrated way, as part of comprehensive strategic plans.
“We have been seeing companies combine multiple processes in their outsourcing initiatives rather than outsourcing single processes or functions on a stand-alone basis,” says IAOP strategic advisory board member Neil S. Hirshman, COP, partner at Kirkland & Ellis LLP. “And these companies are creating innovative ways of managing multi-vendor environments and the connections between dependent services.”
Ossama Nazmi, Chairman of IAOP’s MENA Regional Advisory Board, expects that major companies will seek to work with only a handful of vendors and hire those that have global reach and presence in both established and emerging markets.
“Companies heading for that type of business consolidation will enjoy an easier and leaner vendor management, coupled with higher bargaining power with those few selected vendors,” said Nazmi, vice president of Xceed.

7.  Retail-ization of the Marketplace
Where will companies “shop” for their outsourcing services? Just as with your holiday shopping, it depends on what you’re looking for – price, service, something different, or advice from someone you trust.
With the increased specialization in the provider landscape, Accenture’s Hindle sees three categories of providers emerging:

• Big box operations – offering bulk standard, commoditized services at attractively low prices, leveraging scale and volume, appealing to buyers interested primarily in reducing cost
• Boutiques – specialty shops offering differentiated functional or industry solutions, appealing to buyers seeking a more customized service
• Department stores – multi-service houses offering one-stop shopping with access to a wide selection of their own label and branded offerings, augmented by deep service integration capabilities, appealing to buyers seeking trusted advice and support

“As growth returns to the outsourcing industry, buyers re-assess their sourcing strategies, globalization levels the playing field, and new tools and technologies are more widely deployed, the structure of the outsourcing industry will begin to look much more like a typical retail model,” Hindle said. “Thinking about sourcing decisions in this simple framework can help buyers crystallize their sourcing decisions and ask themselves ‘should I shop at WalMart? Orvis? Nieman-Marcus’?”
Dalal also predicts a greater stratification of service providers ahead, with large broad firms and large specialized firms dominating, while middle- and lower-sized providers struggle to survive.

8. Innovative Partnerships and Consolidation
Look for greater opportunities for providers to collaborate more closely with their customers in 2011, our experts said.
“Companies will look to their strategic external providers to help them cut costs, do more with less, work smarter and be innovative,” said Santos. “We will see more innovation coming from collaborative relationships rather than ideas coming from internal sources. Contracts will need to be designed to capture more of the collaborative partnership spirit. Companies will better understand that they cannot do it alone and need the skill and expertise of their providers to survive.”
Santos also predicted the emergence of alternate funding models and other new business models, to help companies with cash flow.
Also expect more cross-border partnerships in 2011, as cash-rich provider firms from developing nations invest into mid-market domestic provider firms in the U.S. to offer collaborative multi-country services, Varanasi says.
Challenging local economic conditions in India and the resulting competitive pressure to reduce price offerings of outsourced services will lead to increased consolidation of offshore providers, Dalal said. This trend will provide further opportunity for established U.S. providers to acquire struggling providers and increase their offshore presence.

9. More Emphasis on Risk Management
In 2011, companies will experience the need to better manage market, financial, security, and other risks, IAOP members predict.
“Global regulation, global economic policy and technology security remain hot button issues,” according to Taylor of Colliers USA.
With the increased reliance by companies on the Internet and cloud computing, companies will need to develop “rock-solid data and information security and privacy strategies and plans,” says Shocklee, president and CEO of Global Sourcing Optimization Services.
“Government regulations will continue to be enforced and companies will need to adapt and find better, more efficient ways to handle compliance, legal and financial risk,” said Johnson & Johnson’s Santos.

10. Talent Competition
Recruiting, developing and retaining key employee talent will be a critical challenge facing organizations in 2011. To prepare for this, IAOP continues to see ongoing demand for its professional certification and training programs under its Outsourcing Professional Certification Framework.
Emerging outsourcing destinations also are expected to increasingly adopt IAOP’s training to build their ranks of skilled outsourcing workers, first seen by Malaysia in 2010 with the government’s endorsement of the COP training.
Says IAOP’s Latin America chair Galán, “Latin Americans are always open to learning by adapting best practices, developing strategies and promoting education and professional development to increase the region’s competiveness as an offshore and nearshore destination. That openness and the human talent you find offers a great combination to compete in the outsourcing world.”
Dalal anticipates corporations will use more supplementary staffing as a normal stop-gap measure to control headcount while gearing up to handle anticipated demand increases. This trend will alter how supplementary staffing companies compete against traditional outsourcing service providers. In IT, engineering and R&D, such project based staffing will become a form of “hybrid outsourcing,” he said.
Social media also will be increasingly used by companies to recruit employees globally, and also to mine consumer behavior, Varanasi predicts.
So, how many of these trends will come true and to what extent will they affect us all? Considering our pundits’ excellent batting average in spotting trends, you’re well advised to take their predictions to heart.