Challenges ahead of Indian Outsourcers

August 31, 2011: Where US and UK based companies are focusing more on rolling out huge investments into the offshore market, there are also some companies in the US thinking of reducing IT budgets.

Huge investors are planning to adopt new strategies to reduce the expenses incurred in rendering services of different vendors. To overcome the economic fluctuations it is a viable decision to rethink on the investments. This decision of US based companies will obviously have an impact on offshore market, especially in India. Each and every new decisions and changes in the US and UK market has a direct impact on the India Business Process Outsourcing (BPO) sector. The decision taken by many companies has both positive and negative impact on the nation as such.

Companies which are rendering the service of outsourcing firms in the U S or other vendors in Near Shore market may find it more comfortable to invest more in India. The Indian outsourcing market is much cheaper and decision on budget cuts by the foreign countries is a good sign for the Indian Business Process Outsourcing (BPO) sector. There is a possibility of increase in the number of investors who find investing in India Business Process Outsourcing (BPO) sector cheaper.

There is a negative side which cannot be neglected. As part of cost cuttings, foreign players may find it comfortable to pull out form the Indian market and depend more on cheaper Nearshore market. Many countries such as South Africa and Philippines are emerging as cheaper outsourcing markets. There is a possibility for the companies to depend on the vendors in the cheap market such as South Africa and Philippines.

The emerging trend is also paying more attention on shared services. In the recent past a huge number of companies took decision to shut down the business with offshore service providers and depend exclusively on shared services. A top executive of a multi national company said that depending on shared services will help us to get our works done very quickly and very cheaply. One among the best option to reduce expenses as well as maintain proper flow of business is to depend on the shared service models, he added. 

Indian IT players, which has already set up call centers and BPOs in U S is planning to pull out themselves from this highly fluctuating US economy. At this point of time the Indian companies has even stopped fresh recruitments. The cost cutting decision might affect many Indian companies, basically players such as Infosys, Wipro and TCS. 

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