Now, Indian firms will offshore work

Now, Indian firms will offshore work
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First Published: Thu, Feb 22 2007. 04 39 AM IST
Updated: Thu, Feb 22 2007. 04 39 AM IST
Mumbai: Indian corporations are likely to offshore 3-4% of their total information technology (IT) outsourcing requirements in the next two years as the domestic IT industry is increasingly facing a human resource crunch.
The finding is part of a study being conducted by leading technology consultant Gartner on new delivery vehicles of IT sourcing in the Asia Pacific region.
This marks a reversal of trends as India for long has been a destination for offshoring business. Even foreign IT companies have set up their branches in India to grab Indian as well as global offshoring business at a lower cost. Outsourcing for a typical engineering service in India costs 50-55% lesser than what it costs in the US.
The industry, that currently employs 1.6 million professionals, finds only 25% of the three million that graduate every year employable. Growing at 28%, the IT and IT-enabled services industry is planning to rope in schools to train some of the graduates every year and make them employable.
“It is for the first time that some of the Indian corporations will start offshoring their IT services requirements in entirety. So far there has been instances of only niche area offshoring for specific capabilities,” said Arup Roy, senior research analyst IT services, Gartner India Research and Advisory Services Pvt Ltd in an interview with Mint.
Outsourcing business basically consists of IT management, which includes services such as managing data centre or networking requirements of a firm, and business process such as customer service or credit card processing.
Indian corporations had an estimated $3.84 billion (Rs16,896 crore) spending on IT services in 2006. This is expected to grow 28% in 2007. Out of the total spending, 12-15% is spent on outsourcing IT management services and 4-6% is spent on outsourcing business processes.
“Increasing globalization as well as domestic expansion are two major factors that will drive the IT outsourcing demand of Indian firms,” Roy said. To meet global standards, corporations are increasing their focus on the core competencies and outsourcing their IT requirements as otherwise they cannot support their business.
The trend of outsourcing by Indian firms started in 2004, with IBM bagging an over $1 billion deal from Bharti for 10 years and Accenture signing a multi-million deal with Dabur.
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First Published: Thu, Feb 22 2007. 04 39 AM IST
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