Offshoring IT Services To India To Expand
Indian offshoring is expected to grow from current USD 1.4 billion to USD 4.2 billion before year end 2010. Zinnov, a management consultancy outfit, forecasts Infrastructure Management Services IMS to be the next big growth Indian offshoring. The banking, financial services and insurance industries are the biggest users of IMS services and will constitute approximately 43 percent of the market. High tech telecom, manufacturing and retail industries will constitute approximately 12 percent each and will be second biggest consumers of offshored IMS services.
Management consulting firm, Zinnov, today released the results of its study regarding the offshoring of Infrastructure Management Services IMS to India. Zinnov forecasts offshoring of IMS to India to grow from USD1.4 billion today to USD4.2 billion before yearend 2010, with hardware support services accounting for the majority of those revenues. According to the report, the banking, financial and insurance segment BFSI represents by far and away the largest market for such services, at 43 percent. The high tech telecom, manufacturing and retail industries are the next biggest consumers of offshored IMS services at approximately 12 percent each.
Although, historically, the majority of IMS has been kept inhouse or outsourced to nearshore locations e.g. in North America, this trend is changing, notes the report. Having leveraged India primarily for call center support, product testing, and other related services over the past twenty years, western multinationals are increasingly looking for other ways to tap into Indias growing workforce. Infrastructure Management Services are particularly suitable for offshoring given the relative disconnect between clients core business offerings and these backend services. Not surprisingly, cost savings between 40 and 60 percent and 24 7 operations are cited as the main growth drivers of the offshored IMS industry.
The trend of having an inhouse IMS or getting it outsources from nearshore locations that is North America is changing. Having seen the efficiency of India in providing call centre support, product testing, and other related services over the past twenty years, western multinationals are now looking out for other ways to benefit from Indias growing workforce.
The offshoring of IMS to India is clearly a huge growth area for both American and Indian vendors with the available talent in that country. And, as western companies continue to put an ever greater premium on holding down costs, we expect this growth to extend well into the next decade� Said Vamsee Tirukkala, CoFounder and Managing Principal, Zinnov.
A third, less obvious reason for the growth in IMS offshoring regards the type of service level agreements SLAs that western multinationals are negotiating with their vendors. In an effort to mitigate the risks associated with offshoring, clients are increasingly engaging in managed services agreements with vendors. The managed services model typically includes language in the SLA that, essentially, ties pay to performance. Other forms of offshoring that have also benefited from this model include call center services and back office processing.
In a sign of the times, Hewlett Packard recently announced the acquisition of EDS and the latters 27,000person Indian workforce. It has been widely speculated that part of the impetus for HPs acquisition is an attempt to displace IBM as the worlds largest provider of outsourced infrastructure services. Said Vamsee Tirukkala, CoFounder and Managing Principal of Zinnov, The offshoring of IMS to India is clearly a huge growth area for both American and Indian vendors with the available talent in that country. And, as western companies continue to put an ever greater premium on holding down costs, we expect this growth to extend well into the next decade.
Source : http://www.offshoringtimes.com/
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