After Satyam Crisis, Survey Shows Outsourcing Customers' Concerns

Six of 10 say the financial scandal raises new concerns.
A whopping 61% of companies have new concerns about, or wouldn't work with, India-based IT services companies in light of the financial fraud that has rattled Satyam, according to an InformationWeek Analytics survey of 221 business technology pros whose companies have done business with Indian services companies. Yet, most respondents say they'll continue working with Indian outsourcers.

Still, more companies plan to decrease their use of Indian IT outsourcing services in 2009 than increase it, a reversal from our survey last year. And there's this: 56% of respondents believe less in Indian outsourcers' value proposition than they did two years ago.

The survey, conducted last week with the news of Satyam's fraud still fresh, reveals that 38% of respondents plan to decrease their involvement with Indian firms this year. On the flip side, 31% say they'll do more work with them.

The biggest problems that customers have had with Indian outsourcers are consistent with last year's survey: communications, underqualified staff, and turnover of key personnel. The No. 1 shortcoming? Fifty-five percent of respondents say their Indian service providers fell short of expectations in delivering projects quickly.

Cost savings are the most frequently mentioned advantage of outsourcing to India, cited by 72% of respondents. Other benefits include access to technical skills (cited by 33% of respondents) and the long-term partnerships (26%).

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Satyam Crisis Puts Indian IT Industry--And Customers--On Edge

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Global CIO: Satyam Scandal Isn't The End Of Indian Outsourcing

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Mary E. Shacklett, President of Transworld Data
James M. Connolly, Contributing Editor and Writer