While the recessionary business climate is expected to fuel long-term growth for outsourcing as companies initiate cost-saving organizational changes, the short-term prognosis for new deals is less optimistic, according to a survey of service providers by advisory firm EquaTerra Global Research.

About 23% expect their business process (BPO) and IT (ITO) outsourcing pipeline expansion to slow in the fourth-quarter, compared to an average of just 7% of service providers reporting declining expectations during the last four years. Those reporting bigger pipelines also dropped to 41%, well below the 55% average recorded since 2004, when the survey was initiated.

"While there is a lot of interest, it can be difficult to consummate new deals," says Stan Lepeak, EquaTerra managing director of global research. "Efforts have slowed or stopped as companies hold back on major strategy decisions. Planning is difficult when you don't know what your company will look like in a few years," Lepeak says.