A look ahead at 2009

As I mentioned in my previous post, having the 2008 sourcing industry information available, and in particular the "tale of two halves", it's interesting to offer some thoughts on what we might see in 2009.

As the global economic situation has moved from uncertainty to weakness to potential fracture, how will this impact the sourcing industry?

The sourcing industry has experience with regard to how to respond to economic weakness, and this typically results in an upswing in business in the sourcing industry. But how will the industry fare in the most severe economic situation since the advent of IT outsourcing back in the late 1980s?

As I did last year, I'll take a risk and offer some thoughts for 2009.

First, we're likely to see a steady flow of smaller deals as buyers of services look for fast execution on any potential savings opportunities, and sellers of services look to increase their revenue in whatever way they can.

Second, we'll see increased focus on fees paid to service providers. In some cases, buyers will want price reductions without any service scope or quality reduction and in others, they'll accept whatever service scope or quality reduction is necessary to get the price reduction they have to obtain.

Third, we're likely to see some M&A (merger and acquisition) activity among sellers of services. In times of low organic growth, M&A activity is often used to boost figures. The dampening effect this time will be the difficulty and/or higher cost of financing.

Fourth, we'll see increased government activity in the sourcing industry, something I'll touch on next time.

Would you expect any additional trends during 2009 for the sourcing industry?

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Michael Rehkopf

Michael has more than 20 years of experience in operations, strategy and sourcing covering all major parts of the globe. He has also worked for Australian, Canadian, German and Japanese companies in both business process outsourcing and IT outsourcing.
Michael's industry experience includes the financial services, manufacturing, telecommunications and travel sectors. He leverages this diverse industry experience and his university background in accounting, IT and his Master of Dispute Resolution, to assist clients in the development of business strategies and the implementation of sourcing strategies. These include the associated evaluation, negotiation and organizational change.
Michael is currently a partner at TPI, the world's oldest and largest sourcing advisory firm. Prior to joining TPI, Michael held leadership positions with Siemens Business Services, OpenPlus International, Mitsubishi Electric and Netron.