Wednesday, November 07, 2007

Rising costs force India to shift focus to partnerships


India's outsourcing industry has moved on from being a low-cost provider and is keen to enter the realm of partnership.

The strongest impression at Indian outsourcer HCL’s New Delhi conference last week was of the offshoring sector trying to reposition itself as a corporate partnership option rather than just a cut-price commodity provider.

As the sub-continent’s economy continues its explosive growth, the price advantage that its businesses exploit is eroding. And Indian suppliers are increasingly facing the same issues as top-tier technology consultancies across the world.

Some big-name HCL customers are already endorsing the shift in focus.

Carphone Warehouse operations director Pete Schofield said major organisations are already looking at their outsourcing deals as an opportunity for innovation as well as expenditure reduction.

“Our contract with HCL has been an initiative to improve our IT capability rather than just strip cost,” he said.

For Deutsche Bank, the offshoring decision was largely the result of the availability of appropriate skills, according to global head of investment banking Tony McCarthy.

“We have expanded in India because it is the largest resource pool in the world,” said McCarthy.

“And forces such as power consumption and the sub-prime mortgage crisis have made us look at collaboration to minimise the disruption of these events,” he said.

The fact is, Indian outsourcers are no longer the new kids on the block. According to Forrester Research, the biggest players are now “leaders”, still behind giants such as EDS and IBM, but ahead of global names such as LogicaCMG and Atos Origin.

And the trend shows little sign of slowing as customer requirements increasingly dovetail with outsourcers’ core capabilities. Remote infrastructure management (Rim) contracts, for example ­ where hardware remains in the client’s data centre but is operated remotely by the service provider ­ are up by 30 per cent in the past year.