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IT Outsourcing

Offshore: India struggling to keep its market share


Since a few months now, I have been feeling a great commercial pressure from Indian offshore companies… We knew they were commercially aggressive but now they become harassing. There is no day without me receiving some canvassing emails or phone calls. This reveals some difficulties without a doubt, as highlighted in a recent article published in the IT press, announcing that Gartner expects a slowdown in the growth of offshore business in India… For the first time in its history, Infosys is also expecting to record a drop in sales of about 3 to 6%in 2009.As an explanation, there are of course the consequences of the global economic crisis: customers tend to decrease the volume of their operations, they seek to renegotiate prices. But before that, and in a general manner, there are also high turnover rates, salary inflation, infrastructure problems, the Satyam scandal, the attack in Mumbai… in short, India’s reputation was hurt lately… This benefits other destinations such as Eastern Europe, Brazil, Vietnam, which appear to increasingly overshadow this giant. It is true that India is “a must” for these very large contracts that require the mobilization of huge resources in record time, but these customers represent only a small percentage of companies looking to outsource development projects today. And for the establishment of teams of 10, 20, 50 or 100 people, there are many alternatives in other countries, quite capable of responding to such a need. Perhaps it will rather be those countries which will benefit from the trend tending to promote outsourcing to low cost countries…Well, it is clear that India should still keep its offshore leading position for a while. Indeed, in terms of resources, tens of thousands of young engineers in computer science graduate every year from Indian universities. At this level, no other country can compete, not even China, who faces linguistic problems that hinder the development of the country on offshore markets. One needs to pay 10 to 15% more for English-speaking resources there and the key destinations where one can find these rare gems are already saturated. So the prices go up even much faster than in India…And with their experience, Indians know how to benefit from the rise of other offshore nearshore destinations. Most of the giant Indian companies have subsidiaries in Eastern Europe and they are in the process of settling in Mexico, Brazil.They will not let the biggest share of the cake be taken away like that!

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