Saturday, August 13, 2005

India to lead outsourcing bandwagon: TPI

Offshore outsourcing is set for increased growth and India will continue to be the leading destination on the back of good quality and first mover advantage, according to the latest research by sourcing advisory firm TPI.
The research, based on a survey of 100 senior UK executives responsible for outsourcing within large companies, reveals that 81 per cent plan to increase their offshore outsourcing over the next 2 to 3 years, while only 4 per cent expect to decrease it.
While India continues to enjoy its first mover advantage, being used by 75 per cent of survey respondents, there is close competition for second place, between Central and Eastern Europe (28 per cent) and China (25 per cent), according to the study.
China is seen as an immature outsourcing market and lacks English language skills. However, TPI reports that many large companies are establishing captive operations there, attracted by government support and a huge potential domestic market.
The study also reveals that Indian providers rival Western firms on quality. About 60 per cent of those that have had any significant exposure to Indian outsourcing providers believe they offer a service to rival Western providers irrespective of any cost savings.
Failure rates, says the study, in outsourcing dramatically is overstated. Only 4 per cent of UK outsourcing buyers are dissatisfied with their outsourcing arrangements, while 42 per cent are ''very satisfied''.
Despite this predicted growth in outsourcing, the study reveals that large companies choosing to ''offshore'' their information technology (IT) and business processes to low-cost locations, such as India and China, are increasingly doing so through wholly-owned subsidiaries (captives) rather than external service providers.
The development is just one of numerous trends, including the relocation of some offshored services and a greater diversity in viable offshore locations, which signify increasing maturity in the offshore outsourcing market.

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