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