The annual Black Book of Outsourcing has rewritten the outsourcing industry yet again. The new edition finds the magnetic pull of the US attracting people back towards it, and black marks against the name of offshore providers that forget customer service in the quest for revenues and elitist attitudes.

The Brown-Wilson Group survey of global outsourced service users assesses industry developments (from a solidly US perspective, it must be said) and provides a useful annual snapshot of outsourcing trends as seen from across the Atlantic divide.

Outsourcing models are still evolving and maturing, and change is the constant. Among the 2008 edition's findings are that so-called 'reverse outsourcing' will continue to grow.

With more than 50 percent of many Indian outsourcing firms’ revenue flowing from North American clients, says the report, the apparent movement towards the US as a location is based on “simple supply and demand economics”.

As wages continue to rise in India and the US dollar’s value decreases against the rupee, it becomes expensive for Indian companies to maintain operations solely in India. Not only do US centres provide closer proximity to clients, the facilities also enable Indian outsourcing firms to draw from local talent pools – something that is often overlooked by highly vocal US doom mongers who equate outsourcing with US job losses.

That said, some of the statistics unveiled in the 2008 report confirm that Indian outsourcing providers remain the motive force at work in the centre of the outsourcing industry. The successful Indian companies are striving for an optimal mix of onshore and offshore operations to please clients and drive more business towards them.

Satyam, TCS and Wipro, three successful Indian outsourcing providers with growing North American operations, are among this year’s top honoured suppliers overall, says the report. Also highly placed in several categories are Genpact, Tata, and Cognizant – players that are doing well in the UK and wider European markets as well, as often discussed on sourcingfocus.com.

Indian providers continue to dominate the BPO market, with the 2008 BPO vendor top 10 (in descending order) being: Genpact; Satyam BPO; Wipro; Logica; IBM Global; 24/7 Customer; MphasiS; TechMahindra; and WNS Global. By comparison, the finance and accounting outsourcing top 10 for 2008 is (in descending order) is: Hewlett Packard; Capgemini; Wipro; Accenture; Xchanging; Genpact; BNY Mellon; Infosys BPO; WNS; Steria.

In the category of 'Best Managed Vendor', five Indian providers were lodged high in the top 20 listing. However, one of the Indian market's prime movers, Infosys, tumbled out of the 2008 top 50, with clients reportedly describing “a noticeable shift from customer service to corporate revenue generation, and a corporate culture that has become disappointingly elitist”. If true, the message is clear: remember the principles that made your company successful: US and European clients are perfectly capable of finding remote, revenue-focused and elitist providers much closer to home.

Indicative of the growing re-appreciation of US-centric firms, says the report, is that top honours in this year’s survey went to number one full-service provider overall Hewlett Packard; and then to Perot Systems (2); Computer Sciences Corporation (CSC, 3); Unisys (4), and EDS (5). That top five also forms the top five best managed providers. (Obviously, the survey took place before the industry-shaking merger of HP and EDS, recently approved by the US authorities.)

Generally speaking, the other big approval winners were those vendors that placed a strong focus on verticalisation: outsourcers that adapted to their clients' specific industry demands, rather than applying what the report describes as a “cookie-cutter domain approach”.

Unsurprisingly, the news was not all good for some firms in this year's Black Book. Receiving the most fervent customer disapproval in the US market have been those outsourcing firms that have placed the majority of their company’s workforce offshore without maintaining adequately supported US-based ventures. Five major offshore firms' overall client approval ratings cost them Top 50 positions from last year (Infosys, Hexaware, EXL Service, ICICI Firstsource and Sutherland).

US companies were not immune from criticism: IBM Global, a former Black Book champion, also tumbled in the ratings as users expressed a palpable shift of customer service conduits to centres outside North America, contributing to their frustration and discontent.

Among other trends reported in this year's edition, is that outsourcing is “no longer the refuge of the financially weak or technically deficient enterprise, nor is it a stick to threaten US workers”. Rather, it has become an accepted strategic tool – albeit in a tougher market to navigate successfully. Customers are more sophisticated, and are demanding more flexible contracts, performance penalties, and benchmarking audits – particularly as the economy weakens.

Clients are also placing high value on collective user satisfaction data as a predictor of a supplier’s future performance. That hurts future deals for suppliers whose relationships are not their first priority. Again, the message is clear: in an industry where outsourcing partners are sought to complement the organisation's skills base and core business, relationship building is the key to making the partnership work.

For the second year running, China – which has seen a tremendous increase in outsourcing investment – scored very low levels of satisfaction overall. Latin America and Central and Eastern European suppliers, meanwhile, saw the highest growth in terms of their outsourcing industry with parallel upsurges in client satisfaction scores. Many new vendors from these regions displaced Indian, Philippine, Chinese and Canadian outsourcing suppliers this year on a competitive KPI (key performance indicator) index.

This year's edition also confirms findings that are already familiar to sourcingfocus.com readers: namely, that UK and European customers still view the US as the third most popular destination for offshore outsourcing after India and China. Western Europe tends to prefer regional vendors, while the US is leaning towards western hemisphere providers as likely considered alternatives to China and India next year – the phenomenon of nearshoring, says the report.

Other findings in the report include:

• The Top 10 full service outsourcing advisors for 2008 are In descending order): TPI; Gartner; Hackett Group; Everest Group; Pricewaterhouse Coopers; Booz & Company; 7 Avasant (formerly Stradling); PA Consulting; EquaTerra; AT Kearney.

• The Top 10 boutique outsourcing advisors are (in descending order): Pace Harmon; The W Group; NelsonHall; Hitachi; Vantage Partners; Alsbridge; Global Equations; Ineum Management Consulting; Archstone Consulting; ScottMadden.

• The top 10 document process outsourcing (DPO) vendors for 2008 are: Océ Business Services; Pitney Bowes; RR Donnelley; Innodata; Isogen; Williams Lea; Integreon; Xerox Corporation; Datrose; Merrill Corporation; Lanier.