Posted: Wednesday, January 30, 2008, 4:10PM
Quality of work drives India’s outsource boom
Customer satisfaction, not cost, is the driving force behind many UK companies’ decision to outsource their IT functions to India, according to a new study by sourcing advisory firm EquaTerra.The company’s Outsourcing Service Provider Performance Study 2007 found that 100 per cent of UK businesses currently offshoring all or part of their IT functions are using India as one of their locations and are planning to continue with this strategy. The annual study, which evaluated £34 billion of UK IT sourcing contracts, examined
more than 300 client-provider relationships and 20 service providers – and found that India’s outsourcing giants are now firmly established as major competitors to outsourcing providers in both the US and Europe.
According to Equaterra’s research, four out of the top five service providers ranked in client satisfaction order were Indianbased companies. Outsourcing providers from the country also out-scored their western competitors in areas such as quality and flexibility.
Additionally, Equaterra found that global sourcing is fast becoming an integral strategy for many UK companies, with their findings showing a 10 per cent year-on-year rise in the number of businesses utilising nearshoring or offshoring over the past 12 months.
And while cost is still a major consideration for many businesses, over half (54 per cent) said that they outsourced for other reasons such as availability of skills, flexibility and the quality of work.
India also appears to be far ahead of China when it comes to global sourcing, with just five per cent of the IT organisations involved in the study using the country for
this purpose.
“Business people are making the decision to outsource to India because they can’t find the same resources in the UK,” said Phil Morris, managing director of EquaTerra Europe.
“Indian firms such as Wipro and TCS are achieving real satisfaction in providing skills, flexibility and quality of work and the globalisation of services will require larger, more global suppliers such as Accenture, IBM and HP to reposition their overall delivery models and structures in order to keep pace with newer market entrants.”
The findings come against a backdrop of uncertainty over the Indian IT outsourcing market as the weak dollar takes its toll. A recent Gartner study found that wages in India were rising faster than anywhere else in the world, and at almost double the rate seen in both China and the Philippines.
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