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Wednesday, April 13, 2005

India Can Only Get Stronger In Offshoring

We recently covered Resourcing scale disappoints in China and also covered India Inc Growing Twice As Fast As Japan Inc emphasising the phenomenal progress being made by India Inc -primarliy fuelled by growing software services and offshoring business.
(Via News.com) Marc Hebert initates a discussion on the topic India & Offshore Dominance. Excerpts with edits:
The cost advantage of doing business in India seems to be coming under pressure as salaries for qualified Indian IT are said to be rapidly increasing leading to speculation like countries like china, eastern Europe etc. To paraphrase Mark Twain, the reported death of Indian outsourcing is greatly exaggerated.
The counterargument rests on two pillars: productivity and scale. Salaries may increase, but there are offsetting factors such as experience, infrastructure, high productivity levels and economies of scale to consider. The cost of doing information technology in India is falling, as the range and complexity of projects that can be offshored to India is increasing.
- India has a multiyear experience advantage over other nations. First-generation IT offshore providerscan at best focus in mainframe centric applications, where the opps are clearly decreasing. Indian IT companies are hitting the sweet spot of the enterprise application package market,offloading many of the high-volume, routine tasks that chief information officers struggle to maintain with high-cost U.S. resources.
- Another reason is that India has vastly improved its IT infrastructure. A few years ago,large scale projects required mirrored offshore hardware/software environments that were expensive to set up and a nightmare to keep in sync. That's Distributed system development is now the de facto standard in many IT shops. India's IT infrastructure improvements enable Indian businesses to match salary increases with productivity improvements.
- India has achieved global leadership in adopting continuous quality improvements that guarantee mature business processes and ongoing productivity improvement. By creating real software factories, Indian companies leverage the power of doing it right the first time
- India is rapidly creating huge economies of scale in IT offshoring, which further offset the inflationary pressures of salary increases. To counter wage increases, many offshore outsourcers are implementing large team sizes and long-term projects to help maintain utilization levels at above 75 percent. Marc is spot on - The india based offshoring is getting more and more strong.

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