India remains fave IT offshore destination

By SiliconIndia   |   Friday, 28 December 2007, 13:11 Hrs
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Bangalore: India continuous to be one of the favorite hubs for IT off-shoring and outsourcing globally. Despite the emergence of other locations across the world, newer delivery centres are expected to come up in the near future within the country for IT services, reported The Economic Times.

For starters, it has been BPO services that are moving into tier one and two cities and it is now expected that IT services will follow suit, though at a slower pace. According to Gartner head of research (India) Partha Iyengar, there will be expansion of IT delivery centres within the country into the tier 2 cities. "There will be a bigger hub and spoke model with India, than outside," he added.

Gartner, for example, has increased the number of tier two locations it takes into consideration from 23 to 30. Many companies are looking at starting new IT services centres in locations like Kochi, Bhubaneswar, Mangalore and Coimbatore.

Prayag Consulting CEO Sudha Kumar said that some of the tier two locations have gained enough maturity to become viable IT services delivery centres and companies are looking at tapping into this talent pool.

The reasonable spread of engineering colleges across the country is also helping IT services companies to tap into these tier two locations. However, the movement of companies into the tier two and three locations will be a lot slower as the quality of the available talent pool does not necessarily match the required standards.

Infosys HR director TV Mohandas Pai said, smaller towns have very limited capacity and that makes it very difficult to scale operations. Though, he added, there will be a slow movement towards the secondary cities for IT services centres.

The primary reason for these companies to move into these locations is due to lower attrition and costs. Typically, IT professionals in these locations remain within a particular company for a longer period of time. Gartner has analyzed 30 countries and assessed their suitability for offshore locations.

The analysis showed that India remains the undisputed leader in offshore services, but increasingly, countries such as China, Russia and Brazil are providing credible alternatives.

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