The $350b Outsourcing Market
Date: Friday , February 28, 2003
Global financial institutions will pump in $350 billion in the next five years in India for offshore business. Of this, 60 percent will comes in as new business, according to study of 27 global institutions by Deloitte Consulting.
India will be the major offshore hub because of its winning combination of low cost and high expertise. “India as an offshore destination is really looking up for the financial institutions worldwide. This is mainly owing to the low cost and domain expertise in the country,” said Christopher Gentle, director of research (Europe), Deloitte Consulting, on the sidelines of Nasscom 2003, the global IT conference currently on in Mumbai.
He added that sourcing to the lowest cost and most appropriate skills location includes two things: mainly flexing the organization to manage labor rate fluctuations and managing location risk. Industry expertise and cost are the most important selection criteria. He added, “This kind of investment by the FIs in countries such as India will result in a cost saving of $140 billion for these global FIs.”
It is estimated by Deloitte that more than a million jobs will be transferred to India in five years. However, Gentle said the route to success for an organization in the 21st century is a combination of cusp of revolution and IT governance.
He said there is no correlation between IT spend and share price. According to him, it does not matter how much one spends on technology but how it is used to one’s advantage. “In most cases large IT spend does not imply good shareholder value. It is the management of IT which is important to create value for the investors.”