India emerges as global leader in ideal offshore service location

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When it comes to being an ideal offshore service location, India has emerged as a clear global leader in terms of revenue, followed by China, which is fast coming up as the most serious challenger. Countries like Indonesia, Bangladesh, Sri Lanka and Vietnam are also offering increasingly lucrative cost advantages, top Gartner officials said.

Over 48 per cent and 45 per cent of its clients were using India and China for nearshore or offshore outsourcing respectively, according to NYSE-listed Gartner Inc, one of the the world's largest IT research and advisory companies.

“Although the use of Asian countries for offshore or nearshore services has not yet peaked, we are seeing some distinct changes in demand and supply patterns in the region,” Jim Longwood, vice president, Gartner Research, said on Wednesday. He said while Bangladesh, Indonesia and Vietnam are continuing to gain regional traction for offshore service delivery, more mature countries like Malaysia and Philippines, are refocusing on their core capabilities of higher-end IT infrastructure, help desk, application and business process services.

Explaining these changes in demand-supply pattern, Longwood said, “Ongoing cost pressures in Europe are driving some multinational corporations to consider moving their offshore services from mid-cost countries like Malaysia to lower-cost locations in Asia, Eastern Europe and Latin America. Some Western countries are becoming more protectionist, which is also having a negative impact on demand for offshore services from Asia Pacific.”

“With demand slowing in Europe and North America, we have seen a range of Indian providers expanding their regional Asian presence and leveraging their nearshore capabilities. As a result, they are growing their presence in more mature markets like Singapore and Malaysia, and are now challenging the traditional MNC application service providers in these markets,” he said.

Significantly, the service providers, on their parts are taking advantage of market changes to revise their business strategies.



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