India outsourcing market to decline

One of the recent articles in CIO is interesting. The article, quoting Gartner, says that India offshoring market is set to decline. Earlier 90% of the offshoring work used to come to India by default. However, this percentage has reduced to 60% now due to various factors including increasing wages and attrition levels. See the full report here.

One more related article states that Indian vendors have room to slash offshore prices by up to 12%.

Indian outsourcing market growth was slowing down over the past one year. These reports reconfirm the trend of reducing volume and price. This will be double whammy for Indian IT vendors.

Over the last few years the cost structure in India has grown high exponentially – primarily due to wage increase and real estate prices. The current challenging economy would make Indian vendors to resort to several cost optimization measures to stay competitive and attract business.

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1 Response to “India outsourcing market to decline”


  1. 1 Pandu April 25, 2009 at 5:27 am

    Dan

    I agree that it is a double whammy.

    If IT Offshore vendors remain as ‘offshore’ vendors only, don’t see much future in the next 10 years. The vendors have to scale up the value chain and compete with the likes of HP, IBM for the total IT servies market. Unless the offshore vendors do mission critical projects wherein there is high visibility for the kind of work being done, growth that we have witnessed in the past may not be there in future.

    Thanks.


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