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Freelance & Outsourcing Industry: Difference between revisions
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==== World Bank Research ==== | ==== World Bank Research ==== | ||
Some clients have frozen contracts, while others have demanded additional services in order to reduce costs. Providers have responded to the changing demand by employing a number of different strategies to reduce their own costs, including lowering salaries, opening offices in cheaper locations and finding innovative solutions to enhance efficiency. <ref>https://deliverypdf.ssrn.com/delivery.php?ID=266082064082027031086016102081005000069015002033002030090053015123058034007051106099097124113114066001033040063006019074097002004000072023087067089019122086100087096084119123110090017126094&EXT=pdf&INDEX=TRUE</ref> | |||
===== Global Offshore Services Market Size ===== | ===== Global Offshore Services Market Size ===== | ||
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===== Impact of the Economic Crisis on the Offshore Services Industry ===== | ===== Impact of the Economic Crisis on the Offshore Services Industry ===== | ||
* There has been a '''substitution effect, moving activities from high cost locations to lower cost locations. This phenomenon has continued during the economic crisis.''' Indeed, some countries have seen acceleration in the offshore services industry. A country case example of the substitution effect is the Philippines, which has continued growing despite the global financial crisis. | |||
* Effect of the economic crisis is a '''general decline in the demand for offshore services by existing clients. This is the first time that the industry has faced a slowdown; however, it still presents positive growth rates'''. The slowdown in demand is the result of a number of factors, including frozen offshore service contracts, reduction in the scope of the contracts, and pressure on pricing. The immediate '''consequences for providers have been the need to lay off workers, reduce salaries and freeze hiring.''' | |||
* '''Sectors negatively impacted by the global recession generally faced lower demand for offshore services.''' In other cases, clients in industries less affected by the recession show similar demand patterns as before the financial downturn, and in some cases there is demand for even more services. The '''impact of the crisis also depends on the maturity of the industry in different countries''', making it difficult to generalize across the value chain | |||
* '''Banking, Financial Services and Insurance (BFSI) was the economic sector most affected by the global recession. It is also the industry that uses the highest percentage of offshore services.''' Offshore services providers that serve the BFSI segment thus saw demand for their services decline and clients requested the renegotiation of contracts. In order to respond to client demand, providers reduced internal costs, reorganized production and also cut wages. | |||
* On the supply side, the economic crisis has also '''forced providers to reduce prices, which has decreased both annual hiring and salaries.''' | |||
* '''The largest decline in provider revenues was during the April-June 2009 trimester.''' Almost all companies show negative growth rates compared to the same period in 2008. | |||
* '''Providers from developed countries show a sharper decline''' than providers from India. | |||
* In order to mitigate the effects of the economic crisis, '''large providers have decided to expand their operations to developing countries and to reduce their personnel located in rich economies.''' These actions will help cut company costs because salaries in emerging economies are just a fraction of salaries in developed countries. Hiring trends have been concentrated in the developing countries, with most retrenchments and lay-offs occurring in developed economies. | |||
* Another important '''effect of the economic crisis in the offshore services industry has been the decline in attrition rates''', employees became more realistic about their expectations and about their careers. | |||
== References == | == References == | ||
<references /> | <references /> | ||