Outsourcing to India

The one bright spot in the tech business is the software and business process outsourcing to India. Writes the Economist:

The appeal of outsourcing has soared, especially to low-cost offshore locations such as India. As a result, the export revenues of India’s software services market reached $6.2 billion last year, up from under $500m in the mid-1990s.

At some point, the Indian firms may find themselves facing a choice similar to that now confronting IBM, EDS and others: move to a lower-cost location or become uncompetitive. Some day, China, Russia or the Philippines are likely to emerge as a seriously competitive threat to Indian outsourcing. The current thinking in India is that it has a window of three to five years before those countries match its value for money in outsourcing.

The leading Indian outsourcers reckon that the key to their long-term prosperity is bagging ever larger deals and moving ever higher up the value chain.

I had written about Outsourcing in yesterday’s Tech Talk.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.