Outsourcing market: Too much dependence on India is seen to be a risk – The Economic Times
Posted on November 27, 2010 by Atul
This is the reason why in mid 2009, Neo Group launched its “Global Supply Risk Monitor” service. Too much geographic concentration is not healthy, just like how many us diversify our stock or investment portfolios.
BANGALORE: The Mumbai terror attack of 2008 created a term that is increasingly coming into the lexicon of IT outsourcing, India plus one. Some attribute the origin of that term to Forrester Research , which, following the terror attack and the Satyam scandal, recommended that companies should derisk by spreading their outsourcing operations beyond India, to at least one other country. Recently, Hewlett-Packards VP of enterprise services Robb Rasmussen said in an interview to CIO.com that a lot of HP clients want an India-plus-one strategy. “Historically, theyve had a presence in India, but to mitigate risk,theyd like to have some assets somewhere else,” he said. Tom Georgens, CEO of storage company NetApp , told TOI last month that the company needed to diversify from India, which is currently its second biggest site, the first being its California headquarters. “There are risks of inflation, the infrastructure may not catch up, and there are any number of things that are beyond our control,” he said. India currently dominates the outsourcing market. A survey by Capgemini, in partnership with Harris Interactive, which was released in September this year, found that more than 60% of the US companies surveyed were outsourcing to India. China came in second at 27% and Latin America at 25%. Most estimates indicate that India has well over a 50% share of the total outsourcing market. But current trends suggest this figure will come down. John C McCarthy, VP and principal analyst in Forrester Research, says clients are increasingly looking at an India-plus-one strategy to hedge geopolitical risks. Firms are also seen to need to curry favour with local governments for local licenses and business, and with more and more countries jumping on the offshoring bandwagon and offering themselves as competitive locations, global firms are being compelled to give some of the outsourcing business to those geographies.
via Outsourcing market: Too much dependence on India is seen to be a risk – The Economic Times.
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