IT clients look beyond India for outsourcing

Bangalore: IT buyers are expanding their global sourcing networks as part of an effort to reduce their dependence on a few large locations such as India, says a new report by Everest Research Institute.

Recent events impacting offshore locations, such as terror attacks and typhoons, and suppliers (such as bankruptcies, frauds) have underscored the need for holistic risk management in global sourcing, the report says. "Traditionally, global sourcing risk management approaches remained largely focused on engagement-level performance management. However, a more sophisticated approach to risk management compels buyers to understand risk from the entire sourcing ecosystem spanning each individual supplier and delivery location as well as the collective portfolio of suppliers and locations," says the report.

The institute also says that another new global sourcing paradigm is emerging and generating additional push for creating a global delivery network, reports Economic Times. "This new paradigm is associated with a more robust and complex demand profile that mandates a global delivery network and is creating further impetus for expanding the delivery footprint beyond the traditionally favored offshore destination, India," Everest says. A combination of these two factors is creating a demand for global locations that support technology and business process delivery. Clients now have a number of credible offshore destinations to choose from.

The report identifies these areas as Brazil, Central and Eastern Europe, Israel, Mexico, the Philippines and South Africa. These markets represent a blend of locations that are either superior skill markets or large talent markets that global sourcing buyers can't ignore.

"The supplier landscape in these emerging markets includes a mix of global majors, India-centric suppliers expanding their delivery footprint, and domestic or regional suppliers that have roots in the emerging market. A handful of suppliers in this new category have acquired meaningful operating scale and through investments in delivery capabilities and adopting industry best practices, successfully serve Global 1000 corporations," the report says.