Indian CIOs Should Consider Offshore Outsourcing
By CXOtoday Staff
Mumbai, Jun 11, 2007

According to the press release issued by Gartner, in India, demand for skilled IT personnel by initiatives like the Indian government's recent National E-Governance Program (NEGP), and resource hungry Indian offshore service providers are outstripping local supply. Local CIOs are finding it difficult to manage the shortage of skilled local IT resources as internal business units become demanding in the area of IT requirements and schedules.

Gartner recommends Indian CIOs to develop innovative programs for retaining the talent they have. Alternative sources such as hiring from small and mid-tier cities, should be given a thought. Training should be given a lot of importance, with companies investing into it.

The study recommends that Indian CIOs should evaluate staff augmentation from all parts of the globe in their sourcing strategy. This will create a sense of competition among local vendors increasing their focus on local opportunities.

Tier 2 and tier 3-level Indian service providers should be considered for their key capabilities in various aspects of IT delivery. The right provider can provide domestic resources and perhaps a higher level of attention to issues and demands.

"Local service providers lack adequate focus on the Indian domestic market, widening the demand-supply gap by not allocating enough quality resources for Indian customers," said Linda Cohen, vice president and distinguished analyst for Gartner's IT sourcing group. "Service providers typically allocate the best resources to their global flagship customers that pay in dollars and yield better margins. This is particularly true with Indian service providers".

India is undergoing massive economic growth. Gross Domestic Product (GDP) grew 9.2% in fiscal year 2006, which was second only to China among the major economies of the world. A recent Gartner survey conducted among more than 1,400 CIOs worldwide, showed that IT budgets in India had the highest growth of 16.19%, compared with an average of 3.16% in the rest of the world.

These challenges and market conditions require Indian CIOs to look beyond the limits of their own geographical boundaries, much like their western counterparts. Gartner predicts Indian companies will increasingly go offshore in their sourcing strategies, which will result in outsourcing deals offered by some Indian companies that include higher end parts of service delivered from other parts of the world.

"This global sourcing model will become business-as-usual for Indian organizations," said Arup Roy, senior research analyst for Gartner's IT services market group. "Indian companies will increasingly source IT skills from nearby Singapore and Hong Kong. The market has already seen the first signs of this trend.