Fears of geopolitical instability may impact the global offshore services market, as sourcing, procurement and vendor management executives review their options to mitigate risk, according to
The offshore outsourcing market has been relatively stable in recent years, with organizations using a mix of onshore, nearshore and offshore resources with relatively stable demand and supply patterns. However, recent events like the Sri Lankan terrorist attacks, the
"Political and economic stability is an important factor in offshore outsourcing arrangements," said
For example, Gartner estimates that
"How the trade talks progress may hinder
Gartner predicts that by 2023, 65% of larger enterprises using captive offshore or nearshore service delivery centers will have adopted a multicountry sourcing strategy for these services.
Undertake proactive risk management to address geopolitical events
Organizations typically follow a sound risk management process as part of their due diligence when they first select a vendor and/or country for the delivery of services, but often don't continue it. Organizations should monitor industry press, government trade sites, country/embassy immigration sites and feedback from sites for signs of impending problems.
Split risks across multiple countries
Gartner recommends that organizations build a roadmap to split risks across multiple countries and/or onshore low-cost centers, including automation of service delivery.
Through 2022, Gartner believes the potential for further geopolitical disruptions will accelerate uptake of intelligent automation of managed services by more than 25% and will spur movement of these services onshore to mature country locations.
Organizations should proactively assess their key in-country risks and short-term options for anticipated scenarios by identifying key signposts when significant action will be required.
Create contingency plans
When using a large regional or global delivery provider to deliver services only from that country, contingency plans often do not adequately assess geopolitical instability scenarios, or contingency plans need updating. Gartner recommends proactively addressing these scenarios with the incumbent provider.
"Although you can't control a sudden cessation for service delivery due to unexpected events, you can be prepared for it," said
Gartner clients can learn more in the report "Mitigate Offshore and Nearshore Service Delivery Location Risks Created by Geopolitical Instability."
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