When economic conditions are bad, outsourcing increases and the focus on cost becomes dominant. Enterprises have focused so much on near-term cost reduction that they are in danger of losing sight of their overall sourcing strategies. Understandably, enterprises are sourcing tactically; however, this is not good for the long term. Tactical sourcing decisions that don't fit with a long-term strategic plan run the risk of creating relationships that are not focused on helping the enterprise achieve its vision and objectives. Challenging market conditions have caused external service providers (ESPs) to be so focused on survival that they have not been investing in future added-value offerings and differentiation. They have had to respond to enterprises' demands to reduce costs, and to competitive threats from traditional sources and offshore companies.  Read more		Lorrie Scardino Editor in Chief Sourcing

			Sourcing in 2003: Another Year of 'Cost Is King' 19 November 2002 Lorrie Scardino  In 2002, the dominant focus of enterprises in their relationships with external service providers was to reduce costs, but this has taken its toll on enterprises and ESPs. Gartner predicts the same in 2003.

	The Outsourcing Market Could Be Heading for a Downturn 12 November 2002 Claudio Da Rold  Lorrie Scardino  Unless enterprises and external service providers move away from traditional outsourcing deals that are focused purely on cost reduction, there is a danger of a market downturn, causing harm to enterprises and ESPs.		ESPs Will Resist the Push for Cost-Reduction-Only Deals 14 November 2002 Richard Matlus  William Maurer  Cassio Dreyfuss  Cost reduction will remain enterprises' main driver for outsourcing in 2003, but external service providers will be unwilling to erode margins further. Conflicts may arise that harm sourcing relationships and frustrate both sides.
	Offshore Sourcing Goes Mainstream in 2003 13 November 2002 Rita Terdiman  Frances Karamouzis  As enterprises increasingly seek offshore sourcing options for cost-effective skill sets, large, traditional U.S. external service providers will be forced to aggressively pursue their own global delivery strategies.		Shakeout Continues in the Indian Offshore Market 13 November 2002 Rita Terdiman  Frances Karamouzis  As offshore sourcing of IT services goes mainstream in 2003, the leading offshore external service providers will continue to gain market share and brand recognition amid a fiercely competitive, consolidating market.
	Aggregated BPO Deal Signings Will Continue in 2003 19 November 2002 Lisa Stone  Aggregated business process outsourcing will grow steadily in 2003, and problems with some early deals will emerge in 2005. Enterprises and outsourcers may need to adjust their deals as assumptions are proved invalid.		Demand for High-End Services Will Catch ESPs Unprepared 14 November 2002 Cassio Dreyfuss  Lorrie Scardino  Enterprises have cut back on discretionary spending for IT services in 2002, forcing external service providers to reduce consulting and systems integration resources. When spending picks up, ESPs will be hard-pressed to deliver.
	A Narrow Focus Will Drive ESP Partnerships in 2003 18 November 2002 William Maurer  Christopher Ambrose  More sourcing partnerships in 2003 will focus on a partner's ability to help an external service provider's short-term goal of winning an enterprise's business rather than on long-term strategic positioning.		'Breakaway' Category Emerges Among Mega ESPs 18 November 2002 Lorrie Scardino  Frances Karamouzis  The consulting and systems integration market looks bleak. There will be long-term changes in the IT services landscape and, in 2003, the breakaway category will emerge among mega external service providers.