A New Opportunity

Without any increase in IT spending by CIOs worldwide Indian software
companies will still benefit! This has been brought about by a paradigm shift–a
need for lower costs, and shortage of skillsets elsewhere. India has evidently
become a choice destination not only for low-end work like ITeS/BPO but also
high-end development work like application design and implementation. In order
to keep pace with market changes, offshore outsourcing for organizations
globally has become more of a strategic initiative. Although the basic objective
of offshore outsourcing was to reduce cost, it evolved to harness on the skill
sets that co-existed with lower costs. More and more organizations are opting
for offshore outsourcing combined with technological competence with lower cost,
flexibility, quality, and efficiency. IDC predicts that over the next few years
offshore outsourcing would be driven by factors such as shortage of skilled
manpower, need for strategic partners, predictability of costs and broadening of
infrastructure and operational reach.

India is the only country to have really gained
According to the recent IDC report, India is the only country that meets all
the requirements of outsourcing offshore development. The eligibility criterion
to become a successful offshore service provider are a vast pool of IT talent, a
solid infrastructure, experience doing business with Western companies, and
fluency in English. Other countries meet a few of the requirements. Along with
the above mentioned criterion India has with it more than a decade-long
experience of designing and delivering IT and ITeS. So as more and more
companies worldwide are offshoring their IT development and management needs,
India stands to gain.

Outsourcing of critical functions: The need of the hour
Low-end services like ITeS are expected to grow at CAGR of 56% till 2006
while high-end software services are likely to grow at 29%. "With size and
growth comes increased complexity of service offerings and delivery, heightened
competition, cost pressures and the need to look beyond traditional markets. Its
time for the Indian service providers to closely look at some of these emerging
shifts in business paradigms in order to keep pace with the growth witnessed in
the past," says Kapil Dev Singh, Manager, Software and Services Research,
IDC India. According to IDC the opportunities for Indian companies lies mostly
in application development and maintenance, and partly in enterprise application
implementation. IDC has observed that outsourcing of IT operations has been
growing at a faster pace compared to consulting and systems integration
business. Strategic partnerships and offshore capabilities are the need of the
hour, where Indian players have immense opportunities even amidst tightened
business environment.

Radhika Bhuyan

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