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Thursday, August 24, 2006

India Anchored Service Providers See Huge Growth Ahead

First it was Stephanie Moore. Gartner's Partha also sounded optimistic. Now, Dana Stiffler from AMR has come out with an excellent perspective on the state of affairs of India Inc. I liked Dana’s term of calling India Inc companies as Indian headquartered companies/India anchored companies. She points out that things are on fire – tremendous growth opportunities are being felt by these majors. The scalability shown by these players are real record of sorts. Dana makes a studied observation here –while all players are seeing increase in their cost structure, seen from a customer perspective - the benefits still outweigh the costs. They have no intention of backpedaling on their outsourcing and offshoring strategy. Another interesting thing to watch in Dana’s chart is the revenue/employee comparison between the global and Indian players. As I wrote recently, sourcing relationships actually encompass a wide array of choices given the dynamic nature of business and the intersections of various levels of capabilities that lay within enterprises and service providers. The increasing expectations associated with outsourcing are becoming difficult to meet. With a wide range of functions getting outsourced, the ability of the outsourcer to bind and manage all these functions meets with a varying degree of disruption. On the other hand, the service providers are coming under huge pressure to improve operational efficiencies and to maintain and enhance margins. So in essence, seen from a customer perspective, offshoring strategies need to be dynamically re-evaluated as the business needs, strategies, models and execution methods keep changing. Clearly for the foreseeable future, despite the higher salaries experienced in India and other offshore markets, customers can continue to work with their chosen offshore service provider out of the existing locations to maintain the cost advantage besides reaping a set of other known higher-order benefits in offshore outsourcing opportunities.

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