Hard Data On Opportunities And Threats For India's Outsourcers - InformationWeek

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3/11/2008
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Chris Murphy
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Hard Data On Opportunities And Threats For India's Outsourcers

Our just-published original research gives a glimpse into clients' satisfaction with their India-based IT outsourcers, and it's a key part of an in-depth package on "What's Next For India." Here are just a few data points that note strengths, weaknesses, opportunities, and threats for India's IT outsourcers.

Our just-published original research gives a glimpse into clients' satisfaction with their India-based IT outsourcers, and it's a key part of an in-depth package on "What's Next For India." Here are just a few data points that note strengths, weaknesses, opportunities, and threats for India's IT outsourcers.The findings are based on 430 IT pros whose companies are working with India-based IT service providers.

Strength: 31% of IT pros say "Understanding our business and industry" has significantly improved the last two years among India-based IT outsourcers.

This is the most-often cited area of improvement, and it's critical for outsourcers looking to move up the value chain. Rajesh Rao, head of Infosys' SAP practice, puts it this way in our "What's Next" package:

Gone are the days when we could say our primary attribute was our global delivery model and our knowledge of SAP. Those things won't even get us invited.

Weakness: 41% of companies say retention of key people on their projects has declined significantly over the past two years.

This the most-cited concern, and it's a part of any discussion of outsourcing. India's talent pool is the industry's biggest concern (though the dollar-rupee exchange rate's high on the list), but also it's biggest selling point. What other country, asks Infosys CEO S. Gopalakrishnan, can ramp up the tens of thousands of highly technical staffers who'll be needed to meet the growing market for remote infrastructure management?

Opportunity: 43% of companies using Indian IT services companies will increase their use over the next two years (26% will decrease, 31% the same)

In related data we'll publish in the coming weeks, we found that, of companies planning to cut back IT spending because of economic conditions, about a fourth expect new outsourcing contracts to be cut. Other categories such as hiring and application development face much bigger hits.

Threat: 45% are "less of a believer" in the value of working with Indian IT service companies than two years ago. (31% more of a believer, the rest about the same.)

Interest in offshore outsourcing remains intense -- seven out of 10 say they got the kind of cost savings that would prompt them to outsource again. But the data suggest India's IT outsourcers face obstacles as they move up the value chain. (Click here for more data, including charts suitable for your PowerPoints.)

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