Which way is the wind blowing in the outsourcing market, Whats looming on the horizon in the next five years. Lets look at five areas which may influence the outsourcing markets. This is necessary in the changed world scenario as more and more companies are resorting to outsourcing.

Consolidation

Competition for outsourcing contracts is more cutthroat than ever, with a huge expansion in the number of suppliers, so some significant consolidation is on the horizon.

Recent rumors of a merger between information technology heavyweights Infosys Technologies and Capgemini Group suggest that the stars are aligning for some significant marriages. Duncan Aitchison, managing director of business advisory company TPI, told Silicon.com that even if the rumored InfosysCapgemini merger never materializes, it reflects current market sentiment. Whats more, other industry experts are predicting more mergerandacquisition activity in this sector over the next year or two.

Globalization

There has long been talk of India losing its edge in the offshoreoutsourcing marketincluding warnings of a shortage of skilled workersbut a bigger threat to Indias dominance could lie closer to home. According to a study by analyst IDC, cities in China will overtake their Indian counterparts as top destinations for offshore global delivery by 2011.

While it remains unlikely that China will outstrip India in the outsourcing business overall, the trend is for increasing globalization of the market as more regions seek to cash in on the offshoring boom.

Beyond the so called BRIC bloc of countries Brazil, Russia, India, China or BRICM, if one includes Mexico, developing nations such as Egypt and Poland are emerging as sources of offshore labor. The trend is not only for a greater pattern of diversity in the outsourcing sector, said TPIs Aitchison, but also for greater specialization as smaller players seek to distinguish themselves in an increasingly crowded marketplace.

Person to person offshoring

Offshoring is more commonly associated with largescale business redeploymentsthe relocation of a backoffice function, say, or a whole department. But research suggests that theres growing momentum for redeployments of a much smaller scale. According to a report by research company Evaluserve, offshoring has reached small businesses and even homesa trend it dubs persontoperson, or P2P, offshoring.

Examples of services outsourced in this way include online tutoring, Web and software development, and writing and translation services. Customers for these services can be small businesses or even individual consumers.

Evaluserve says revenue for this sector stood at more than  US dollar250 million between April 2006 and March 2007, and it predicts that the value of the P2P offshoring market will rise to more than  US dollar2 billion by 2015.

Green sourcing

Rising energy prices have put ecology issues firmly on CIOs radar. But could pressure to demonstrate green credentials influence businesses outsourcing decisions as well,

Silicon.coms CIO Jurya pool of chief information officers and other corporate IT professionals who are polled on various technology issuesrecently revealed that environmental factors play a key role in the selection of technology suppliers and partners.

Virtual worlds

The rise of virtual worlds such as Second Life is making it easier for companies to justify hiring offshore workers for tasks that may include building virtual offices or even working as virtualworld meeters and greeters.

The market for outsourced virtualworld services is still very new, but businesses increasingly are taking an interest in the likes of Second Life, so momentum is likely to build.

Last month, news emerged of a partnership between a Chinese onlineentertainment company and Entropia Universe, a virtual world with a science fiction theme, to create a virtual economy that could provide as many as 10,000 jobs.

Over the longer term, customer contact jobs, including those for help desk and call center servicescould migrate into virtual worlds, where customers can be both informed and entertained.