US companies prefer local IT service providers over Indian providers: HfS

According to the latest survey report by HfS, corporate leaders in US are keener to hire the service of local BPM service providers over Indian vendors to manage their IT functions. The report states that corporate leaders are seeking new values in terms of innovation, communication skills and domain knowledge rather than just cost savings while deciding to hire the service of IT process managers. As per the survey results, the corporate leaders believe that the values they seek are much more readily available in US than in offshore destinations.
HfS Research is the leading research and analyst firm. They provide insightful analysis of the sourcing industry. HfS recently commissioned the survey among the US enterprises to understand the trend in buying IT services among the companies in US. The survey was conducted among the 215 enterprise buyers of IT services. According to the respondents, cost savings is only one major element that influences whether to deploy onshore service providers or offshore service providers to manage IT functions. The report will be available soon on HfS site.

The research analysts are of the opinion that companies in US are very keen to hire onshore services to manage their IT functions but they are left with fewer choices unlike offshore services. The report claims Indian service providers are losing their presence in US IT service industry as they are reluctant to build a robust presence in the market by hiring more local talent to manage their US clients’ IT functions.

Key highlights from the report

  1. According to the respondents, they can save up to 60% of cost if hiring onshore services and 22% of cost if managed by Indian offshore service providers.
  2. The respondents indicated that they would hire the service of onshore service providers if it would result in 15% cost savings and consider off shoring if only they will gain 30% cost savings.
  3. Workforce skills, experience, availability of qualified workers and English speaking capabilities are the elements in addition to cost savings that influence the leaders while deciding whether to deploy onshore service provider or offshore service provider to manage IT functions.
  4. Among the respondents, 78% said that the domestic service providers offered them good culture understanding and communication while only 30% said that Indian providers did the same.
  5. According to 71% of the respondents, US based BPM deals were innovative while only 41% of them said that Indian BPM deals were innovative.
  6. 77% of the buyers gave high marks for work ethics shown by local providers while 71% gave high marks for work ethics of India IT service providers.
  7. According to the report, strong sentiments against moving jobs to offshore locations in US have also influenced the leaders to seek the service of local providers.
  8. The report predict that much of the IT functions that are managed at offshore destination like help desk support, testing, systems maintenance will be continued to be managed by offshore service providers.
  9. According to the report, high level IT functions like software development are more likely to be managed by onshore service providers.

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