Offshore outsourcing at risk from conflict?

Offshore outsourcing in locations such as China, India and Vietnam can offer companies cost savings and give them access to technology resources that may be scarce in the domestic market.

To date, India has been the most popular choice of offshore location. However, with the political situation between Pakistan and India tense, analysts at Giga Information Group have taken the alarmist move of warning clients that have outsourced operations to Indian companies to ensure they not only have thorough contingency plans in place, but that they are in "constant communication with their vendors" to make sure that those plans are "viable and can be executed immediately".

Giga says that companies should foremost worry about human resources and project management issues, since the actual hardware rarely resides in India.

"The concern about mainframes being bombed in Bangalore is not relevant," advises Giga. Instead, organisations should concentrate on having sufficient personnel to maintain their systems, work on development projects or man call centres at short notice.

Furthermore, says Giga, outsourcing customers should keep a close eye on systems and service documentation, so that contingency plans can be quickly and efficiently executed if needed.

A number of the outsourcing companies have already taken steps themselves to try to reduce the risks. For example, some have opened up operations in alternative locations, such as Northern Ireland and the Ukraine.

Other companies say they have been adversely affected by Giga's advisory note – one executive at a major Indian outsourcing company told Information Age that insurance premiums on outsourcing sites in India had soared bacause of the analyst group's advice.

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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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