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Gartner: US Cos Eye More Offshoring, Indian Firms Tentative

03 March, 2009

Recession-hit U.S. companies are tilting towards increasing IT offshoring work but few Indian software firms have been chasing these deals, Gartner’s India research head said.

Indian firms need to focus on revamping their sales model to market an ability to help generate cost savings and add value to the client’s operations, Partha Iyengar, vice president and regional research director at Gartner India, said on Monday.

“The concern I have is, I see very few companies doing that.”

Only two firms had announced a decision to expand sales force, he added.

“I had one client telling me ‘I am at a point now where I need to get more offshore plans together, but why aren’t the Indian companies coming and talking to me?'”

“Why aren’t they getting more aggressive? – That is the question I am getting from clients,” Iyengar said.

Indian companies could lose out to global rivals with strong offshoring capability such as IBM, Accenture and other European firms, if they did not move faster, he added.

The recession in U.S., which accounts for more than half the Indian software industry’s revenue, and global financial turmoil has halted the sector’s scorching pace of growth.

The crisis caught companies off guard, he said.

“The companies are now getting out of the initial panic,” he said.

“Now that they are getting to the point of saying, ‘now that we have that settled, what do we need to do to address business imperatives?’, that’s where offshoring comes into play.”

Gartner saw an increase in calls from clients looking for offshoring, with 20 percent to 30 percent of these from those offshoring for the first time, he said.

In February, the National Association of Software and Service Companies (NASSCOM) slashed its 2008/09 growth outlook for India’s IT exports to 16-17 percent from an earlier forecast of 21-24 percent.

“The NASSCOM forecast is actually conservative. I am hopeful the actual numbers would be a few percentage points above the forecast,” Iyengar said.

Last week, U.S. President Barack Obama pledged to end tax breaks for companies that send U.S. jobs overseas, but Iyengar said, he did not expect a strong backlash as companies did not offshore work to avail of tax breaks.

“I would be very surprised if because of this, there’s a reduction of offshoring.”

 


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Gartner: US Cos Eye More Offshoring, Indian Firms Tentative

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