Global outsourcing beckons Indian IT

Tuesday, 04 November 2003, 20:30 IST
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BANGALORE: With the slump in the global technology behind it, the Indian software services sector can look forward to a rebound in business opportunities in the next few years. The fact that the Indian IT industry made the best of the tech slowdown -- by converting the adverse conditions into providing high quality services at lower costs -- has made it a favourite destination for outsourcing and off-shoring by global majors. The U.S.-based president of global IT research firm International Data Corporation (IDC) Traci Gere highlighted the India advantage here Monday. As against a negative growth of 4.1 percent in global IT spending last year, the industry had witnessed a positive growth of 0.4 percent till October during the current year, Gere said. She was speaking at the Global Outsourcing Summit being held here as part of the ongoing five-day Bangalore IT.COM 2003 event. "Though the double-digit growth rates of the boom times, when the global IT budget grew by 10.8 and 10.4 percent during 1999 and 2000, may not repeat in the coming years, recent IDC findings project global tech spending will grow by 7-8.3 percent by 2006-07," Gere said. The current turnaround in the U.S. economy, which has witnessed a 7 percent growth in consumer spending on an annual basis during the last quarter (July-September), signals a revival in the fortunes of its businesses. Delivering the keynote address on the Outsourcing Opportunities in the New Global Landscape, Gere told a gathering of 300 tech delegates that the Indian IT industry should capitalise on its multiple advantages for a greater share of global software services. "Indian software firms in the small and medium enterprise segment must emulate the global services model of their global peers such as TCS, Infosys and Wipro to compete with the IT vendors of other countries to grab multi-million dollar contracts for sustaining their growth," she said. With global IT majors like IBM, EDS and Accenture looking increasingly towards India for outsourcing their innovative requirements cost-effectively by setting up captive offshore development centres, the Indian software sector is bound to witness competition. "The chiefs of global enterprises have become quite sensitive to pricing and are sceptical about spending keeping in view the return on investments and optimal utilisation of resources," Gere said. "In such a scenario, Indian firms should consolidate their position by developing domain expertise across the verticals so they can not only deliver cost-effective services, but also provide innovative products/solutions to expand their client base," she added. The latest IDC survey of the global tech industry has revealed that the customers' increasing comfort with off shoring and competitive dynamics have altered in favour of India's professional services firms. With global IT spending including hardware, software and services set to cross $800 billion in 2005 and $1 trillion by 2007, the prospects of outsourcing and off-shoring from countries like India are bright. IDC programme manager David Tapper said utility computing would be the next big thing to happen in the tech arena. Companies like IBM and HP have already made a beginning in building utility computing to expand their full range of IT services. "Both the global IT majors are developing a new platform to provide computing on demand which will enable customers to pay for only those products or services they will be using, on the lines of using utility services by the people," said Tapper. When utility computing becomes a trend, the tech industry will witness greater consolidation for providing end-to-end services and products from one-stop shops. "The shift to on-demand computing will gain momentum in the next five years and emerge as the next global outsourcing model while, in the short-term, off-shoring will become a viable model to cut costs and retain the competitive advantage by global enterprises," Tapper said.
Source: IANS