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India's Outsourcing Market to Face Challenge

Restructuring in the outsourcing industry will benefit companies that specialize in offshoring, business processing and high-end consulting, according to a Thursday report by Banc of America Securities. "Deflationary pressure continues to force the industry to restructure around low-cost delivery methods, improved automation and increased use of standardized elements," said Abhishek Gami, the author of the report and a Banc of America analyst. "Companies with mature capabilities in offshore service delivery, business process outsourcing and high-end consulting should continue to benefit.", according to a report on Forbes.

Ironically, a recent study by management consulting firm DiamondCluster International concludes that the boom in companies outsourcing their IT is over, with organisations now much more likely to think more carefully and strategically before they rush operations overseas. DiamondCluster International found that while the majority of organisations remained committed to increasing their IT purchasing, numbers overall had decline significantly from previous years. "The outsourcing market is maturing in fundamental ways," said Tom Weakland, who leads the outsourcing advisory services practice at DiamondCluster.

Meanwhile, a UNI report holds forth a prognosis that the outsourcers haven, India, is set to face stiff challenges as emerging destinations gain prominence with firms seeking access to skills, predominantly non-English languages, that are lacking in existing locations. "India leads the offshore delivery landscape, accounting for over half the agent positions in the first generation offshore locations (India, Philippines, Canada and Ireland), a UNI report said. However, other "emerging destinations" are likely to gain prominence as firms "seek access to skills, predominantly non-English languages, that are lacking in the existing locations," a market intelligence report of the National Association for Software and Services Companies (NASSCOM) said today. Already, several India-based companies have begun to build scale in these new locations, the report added.


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