A recent report from the Management Consultancies Association (MCA) is claiming that in Financial services at least, the credit crunch is boosting outsourcing and offshoring.
Before we in the outsourcing industry get too happy, it is worth keeping in mind that global economic trouble is as problematic for us and anyone.
It makes sense that cost reduction drives as a result of the credit crunch will result in increased outsourcing, but that is only in the near term as companies are surviving but need to take drastic measures to survive.
The danger is that there will be recession and a wave of business failures. If economic activity starts to scale back and unemployment rises, not only will there be fewer businesses to offer outsources work, but businesses will start to face pressures to hire locally and “keep it at home”.
In times of economic stress, protectionism invariably makes a comeback, and that spells disaster for outsourcing businesses.
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