Biggie gets Small
In a recent article published in Cybermedia India On-Line, Kurt Potter of Gartner described the diminishing number of mega-deals reported in 2007. Mr. Potter described the market as moving to smaller multi-sourced arrangements in this, the second phase of outsourcing.
While not news to those of us in the industry, and even considering the large deal at BRISTOL-Meyers Squibb reported earlier in this series, 2007 showed a marked decline in the number of billion-dollar "megadeals" to the lowest level in 8 years – and even lower than 2001's $20.3 billion.
What does this say? Maturity in the market, perhaps, with fewer companies trusting the "out-of-sight, out-of-mind" mentality of the first phase of outsourcing. Instead, these companies are trying multi-sourcing, with smaller individual deals with a variety of vendors.
Who wins? Vendors that are nimble, companies that are smart, and advisors that can scale properly to meet the deal requirements. Who loses? Those chasing the billion-dollar deal. Should be an interesting few years.
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Good point. Added to the question you raise of who wins and who loses, I’d like to add the question of Who Can. Not everyone can employ multi-sourcing. With every added source, I would imagine that integration and system complexity would rise exponentially. So wouldn’t only well-embedded domain expert firms pull this multi-sourcing model off? What do you think?
Comment by P.V.Bhaskar on June 24, 2008 3:03 am