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India is still head and shoulders above the competition in global sourcing and should be carefully considered by organizations selecting offshore vendors, according to Gartner. Although more options for external service provision are becoming available worldwide, india remains the market leader with a majority of essential resources and a sufficiently robust technology infrastructure.

Gartner predicts that by 2007, total global offshore spending on IT services will reach $50 billion.

Despite India\'s current dominance, Garter has recommended that organisations seeking an offshore provider consider multiple country options around the world. Strong governmental support is rapidly propelling China\'s capabilities into the frame while Latin America, Brazil and Mexico are increasingly attractive options. In Eastern Europe, the Czech Republic, Hungary, Poland and Russia are among the countries to watch.

While External service providers (ESPs) have advantages in economies of scale and specific areas of expertise, they do not have a magic solution for immediately correcting flawed out sourcing processes. Businesses must first master offshore ESP management if they are to develop a successful offshore ESP relationship.

The cost of labour is and will remain a major factor in the choice of country destination, Ian Marriott, Research vice president at Gartner said, Gartner had identified countries best known for their IT-related activities (such as software development, outsourcing and IT-enabled services ) and India is currently the clear leader.

It has the majority of essential resources and sufficiently robust infrastructures to deliver IT products and services successfully.

Other countries - including China and the Czech Republic are making inroads, but they currently lack some of the attributes to qualify as leaders.

The Indian product development market, though still in its nascent stage (a mere 0.2% share of the worldwide $180 billion market
in 2002 and 0.3% in 2003), is undergoing a quiet change. From being a cost reduction destination, India is slowly but steadily
emerging as a thriving centre for innovative ideas and new product development, A National Association of Software and Service
Companies (Nasscom) report said. According to the report titled \'Offshore Product Development,\' the Indian product development
market is estimated to grow to $8-11 billion by 2008. Global sourcing of product development will no longer be an optional strategy
by 2007-08. With offshore outsourcing being accepted as a key strategy to stay competitive in the globalised economy, the
production cycle for technology-centred products will require global resources and global delivery, the report said. The main driver
for the emergence of the offshore product development segment has been the enormous pressure on product companies for
faster-time-to-market, coupled with the need to introduce new products and new technologies in newer markets, the study said.
"Thereby, companies are realising that the best option is to outsource it to the specialists. The economies of open source software
will force companies to pare down development costs further, and in the process, increase the offshore component," it said. India\'s
lower costs (it generally costs around $2 million to develop a modest software product in India, as against $5 million in the US),
means that venture capitalists are not risking as much money on a given start-up.

Courtesy: www.financialexpress.com, December 23, 2004

As Americans fret about cheap labour abroad, the real issue has become not one of lower price but quality and scale -
India is on the move to outmaneuver its US competitors on a stunning array of fronts, says a new book. "As more
and more US firms turn to India, outsourcing has begun to shake the foundations of the American upper middle class.
In a twist that highlights the new era, Americans are now even beginning to select India as the place for quality
medical care, at a much lower price," says the book Rising Elephant by Ashutosh Sheshabalaya. Starting out as
service providers for American customers some 15 years back, domestic Indian software firms paid great attention
to the quality of their work. By 1996, there were more software firms in India certified to ISO-9000 quality norms of
the International Standard Organisation than there were in the US, says Sheshabalaya, a Europe-based technology
consultant. However, the best indicator of India\'s quality lead is the massive lead they obtained in acquiring
Capability Maturity Model (CMM) certifications from the US Defence department backed Software engineering
Institute at Carnegie-Mellon University, billed as the \'global standard\' for defect-free software, he says.

Courtesy: The Economic Times, December 23, 2004

India most favoured destination followed by Mexico

The numerous proposals to restrict offshoring in US Government agency projects notwithstanding, a latest report of US Government Accountability Office (GAO) reveals that offshoring occurred in human services in a majority of US states for functions such as software development and call centre. 

        It also found that was the most prevalent offshore location.”Offshoring occurred in one or more programs in 43 of 50 States and the District of Columbia , most frequently in the Food Stamp and Temporary Assistance for Need Families (TANF) programs. However ,expenditures for services performed offshore in the four State-administered programs appear to be relatively small-...India was the most prevalent offshore location ,followed by Mexico”, the recent report by GOA said.

 CUSTOMER SERVICE 

 The service that States most frequently performed offshore in the Food Stamp and TANF programs were functions related to customer service, such as call centers. For Unemployment Insurance and Child support Enforcement programs, offshore functions pertained to software development. In all, the report examined four federally-funded state-administered programs - Child Support Enforcement, Food Stamp, TANF and Unemployment Insurance -and two federally -administered programs that provide student financial aid - Pell Grant and federal Family Education Loan (FFEL ).

   While work was performed offshore in the majority of States for the four State-administered programs,  the report noted that no work was take offshore for the two federally administered student-aid programs. 

    "Fifteen State program directors reported having performed cost comparisons for their current contracts, based on differences in the locations of services, and all reported that they would achieve cost savings if  some of the work were performed offshore, contract costs would be between 0.3 and 24 per cent less than if the services in the contracts were to be performed in the US," it said.

 QUALITY ISSUES  

The few State officials that reported issues with the quality of services provided by offshore contractors said that these involved difficulties in understanding the English of software programmers or customer service representatives.

     While numerous actions have been proposed at the State and federal levels to limit offshoring by government agencies, few restrictions exist with respect to the six programs that GOA reviewed. New Jercy and Arizona have prohibited offshoring in State contracts, it added.

Courtesy: The Hindu, April 11, 2006

Business Wire - Press Release
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