The continuing rise of offshore outsourcing

The adoption of a global IT delivery model by private and public sector organisations is one of the key trends for outsourcing in 2009, along with a rise in the use of services delivered from India, according to a UK study carried out by business advisory firm EquaTerra.

The research looked at more than 400 outsourcing contracts, and found that UK firms’ use of nearshore or offshore resources rose from 57 per cent of deals in 2007 to 66 per cent in 2008.

In addition, the study revealed that IT services provided from India are now used by 89 per cent of organisations that opt for offshoring.

Satisfaction levels with Indian firms are high – albeit lower than many of their more established rivals – but the study claims the gap between offshore suppliers and local IT service providers such as Capgemini and Logica is closing.

However, separate research by the ET Intelligence Group suggests that the top three Indian IT companies – TCS, Infosys and Wipro – are set to experience the worst-ever growth rates in revenue and profit in the quarter ending March 2009.

According to the study, average revenue for the top three is likely to decrease by 0.5 per cent during that three-month period, due to pressure on rates and re-evaluation of client budgets.

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