One story that gained a huge amount of national and international attention has been the news of the disruption to Egypt’s telecommunications network. Damage to two underwater cables in the Mediterranean Sea has slowed Internet connections throughout the Middle East and in parts of Asia to a crawl.

“I think there is a world market for about five computers.” Thus predicted (allegedly) Thomas J. Watson, then chairman of IBM.    

The technology market is no less swamped with vapid (and sometimes plain wrong) predictions now than it was then. However, as all our readers and members can appreciate, the NOA would never make spurious claims or predictions that are no less than 100 per cent accurate. On that note, we’ve got a couple of ideas of what might (or will) happen in 2008: 

2008 will see the looming credit crisis lead to an upturn in outsourcing. The downturn in the economy and possible recession will see increasing numbers of C suite executives view technology and outsourcing as solutions to the need to slashoverheads and minimise any negative impact on the bottom line.  

During 2008 organisations will start to look beyond India for offshore provision due to the climbing attrition rate and rising Indian salaries. Organisations will look for alternatives to India that offer suitable mixtures that enable closer proximity/cultural awareness along with the right pricing options.  

Recent NOA research suggests that many organisations have had problems with offshore captive operations. They have underestimated costs, time and effort required, particularly in acquiring the right people and keeping them. As labour costs rise and the challenge of virtualisation (especially for ITO, see below) through 2008 it will become harder and harder for captives to compete with true outsourced suppliers. 

In 2008 we will see the actual delivery of virtualisation, grid computing and thin client services, which may initially reduce the number of ITO contracts as internal IT groups look to this technology to solve cost and delivery problems. However, the transition from client server applications to “virtual” may be more problematic and costly than expected, whereas outsourcing suppliers have the expertise, skills, models and tools that will allow them to offer these services effectively and cheaply.   

We recently attended the NASSCOM Animation and Gaming conference in Mumbai and some interesting topics came up. Firstly, NASSCOM appears to want to expand India’s outsourcing capacity from predominantly IT to more value-add functions - animation and gaming appears to be one area.

This is not revolutionary – India has been talking about moving up the value chain for several years – but to see it in practice is impressive. However, there are some issues that India has to deal with. The availability of skilled creative professionals is somewhat limited.

India’s USP is executing the mechanical processes involved in the development of animation and games - something which has a strong correlation with its credentials in the software sector generally – rather than the more creative element. This is something that India will have to develop in order to implement a full managed service outsourcing solution in the animation and gaming industry.

Let’s get one thing straight, India, currently at least, is not a big market for animation and gaming - the infrastructure (lack of it, that is) and general cultural attitudes to gaming (from parents) means the market is small and will grow slowly. However, the very fact that India is moving into these markets and up the value chain does provide an interesting look into the outsourcing crystal ball.