Indian offshore IT suppliers

Increased maturity and diversification in the Indian IT services market will lead to an overall increase in software and services exports of around 30% in 2004, according to the latest research by analyst group Forrester.

Forrester considers the major Indian vendors to be HCL, Infosys, Satyam, Tata Consulting Services (TCS), Cognizant and Wipro. India’s growth – a result of the offshore outsourcing trend in North America and Europe – is at the expense of other global providers, Forrester analysts say, which are growing at a single-digit rate or even shrinking.

But global IT services companies – usually US-based, such as EDS and Accenture – are threatening leading Indian companies by luring staff away to their locally-established facilities with higher wages and better benefits. And some companies, such as Citibank and IBM, have gone even further by buying entire Indian companies. This competition for resources is exacerbated by the need to expand work forces in keeping with the rapid growth. As a result, says Forrester, inadequate or rushed training can lead to a preponderance of junior staff and potential service degradation.

New companies in other geographies, such as China, Russia and the Philippines, as well as Western nations such as Canada and Ireland, are also beginning to challenge India’s overall outsourcing dominance. But Forrester warns that their capabilities, experience and quality may not be as advanced as those in India.

These forces, combined with client pressure, are pushing Indian leaders to diversify. A previous focus on application-related services is being widened to include support, infrastructure management and business process outsourcing. However, Forrester notes that the pace of this change is such that “vendors are often learning from their clients in these new areas”.

Although Forrester acknowledges that Indian companies’ capabilities are so broad that “it can be difficult for many customers to tell the leading vendors apart”, it cites client relationship management as a key differentiator: “Some Indian suppliers are easier to work with than others.” Infosys and Cognizant are particularly praised in this area, which is seen as crucial if such companies are to become leaders in IT services across the world as well as the subcontinent.


Indian offshore suppliers
Source: NASSCOMM and Forrester Research

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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