In a recent survey by Alsbridge, Inc. 67 percent of Tier 1 and 2 managed service providers agreed that 2010 is shaping up to be a better year than 2009 for securing meaningful service contracts.

The dust is finally settling, while we’ll see an uptick in outsourcing deals this year, our research reveals an entirely new landscape because of the increase in smaller, more nimble providers, a consolidation of larger players and emerging markets who are hungry for a seat at the outsourcing table.

Our mid-year, survey reports these surprising trends:

1. The strongest demand overall seems to be for Applications Outsourcing (AO) services

I find this surprising given the maturity of that service area and the penetration of most of the providers surveyed into the Fortune 1000 client base for AO and Infrastructure Outsourcing. More conservative companies who weathered the early 2000’s are now feeling the cost pressures of maintaining legacy applications portfolios and seek the assistance of knowledgeable support services providers to help them leapfrog the painful refresh and upgrade process.

2. Globalization is fueling change

As larger providers have consolidated, they have opened the door for smaller providers to enter the marketplace and become more competitive. Moreover, the service delivery horizon is expanding. The US and India have led the industry for a decade but are now seeing competition from companies in Latin America, Eastern Europe and Asia focused on all of the traditional outsourcing areas.

3. Emergence of Person-to-Person (P2P) Outsourcing

Offshoring has reached the small businesses and home cottage industry. Online tutoring, software development and translation services are just a few examples of the emergence of P2P. According to a recent report by EvaluServe, revenue for this sector is expected to reach more than $2B by 2015.

4. It's not all in the cloud

Only eight percent of providers reported a significant demand this year for cloud computing services with 30 percent seeing a small but sustainable rise.

Visit www.outsourcingleadership.com for more information on current buying trends, and to download the full white paper, “Outsourcing 2010: What Are Your Competitors Buying?”