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Monday, April 07, 2008

Mixed future for Indian outsourcing

The general feeling amongst the IT and BPO industry is that growth may slowdown but will not stop altogether.

Reflecting gentle buoyancy amidst widespread gloom, Adventity, the BPO/KPO outfit which presently has seven centers in India, plans to foray into two Tier II cities over the next 8-12 months with an investment of 2.5 million dollars each.

TCS, a major IT outsourcing vendor has recently inked a multi-year contract with Chrysler.

Smartly outwitting the local vendors that are focused westwards, IBM is experiencing “strong double-digit growth” in India, with the SMB segment generating about $500 million in revenue, accounting for half of its top line - making India the fastest-growing SMB market globally for IBM. Though its marquee clients include Bharti Airtel, DLF and Idea Cellular, it is keen on projecting an image that it is not just focused on serving large Indian companies.

So it’s not totally hopeless for India’s IT vendors. But gone are the days of 45% growth and labor arbitrage. Now it’s time they move on to VAS, improved efficiency, get far less dollar dependent and think of geographic spread of services to save their margins going forward. It’s time they start challenging IT architecture orthodoxies and begin to bet on everything – virtualization, change management, data centers and utility computing. But they better be quick before nimble startups upstage them.

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