India is global BPO hot spot : Gartner

REUTERS [FRIDAY, MAY 28, 2004]

India is the global outsourcing hot spot and is way ahead of China, which still lacks adequate infrastructure for offshoring, research firm Gartner has said.

’’India is number one on Gartner radar. It is way ahead right now and China is up and coming. One of the reasons that Indian companies are doing so well in the offshore space is because they are being creative.

’’Some of the Indian companies are actually moving their operations into China and developing their back office capabilities there. At the same time some Indian companies are targeting other countries that have relationships with mainland Europe,’’ Gartner Strategic Sourcing Practice Managing Vice President Roger Cox said in an interview with SearchCIO.

He said China falls down on the list due to infrastructure, language and cultural compatibility. ’’But China is addressing some of these obstacles, such as language barriers,’’ he said.

Cox said besides India and China, the other big players on Gartner list were Israel, South Africa, Northern Ireland, Southern Ireland, Czech Republic, Poland, Hungary and Russia.

’’We evaluate each of these countries based on language compatibility, government support, infrastructure, educational system, cost, labour, political stability, cultural compatibility and security.’’ In Israel, political stability is an issue. South Africa is doing well, but does not have government backing. ’’In the Czech Republic, there are language issues and no strong government support. Poland has language issues, while Hungary has language and infrastructure issues.

“Russia is definitely up and coming. Russia has even developed an equivalent to India’s Nasscom. Russia will definitely be a force to reckon with,’’ Cox said.

Cox advocated for global sourcing, saying : ’’Every company should consider it. It’s global sourcing. We’ve become a global market. If they (US companies) do not, they could be damaging their local viability. Ultimately, it should lead to overall growth.

“A move to global sourcing is inevitable. It happened elsewhere ; it’s been happening for years.’’

According to Gartner research, 5 per cent of the IT jobs have gone overseas and 25 per cent will be ’’offshored’’ by 2010.

However, there is a negative side to offshore outsourcing. A good percentage of American IT workers will be laid off as their jobs are shipped to countries like India and China.

But according to recent Gartner reports, US companies will create new jobs by opening up their own IT operations overseas. This could ultimately avoid additional layoffs in the US, by starting new IT programmes in other countries.