Indian Outsourcing To Increase Fivefold - InformationWeek

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IT Leadership // IT Strategy

Indian Outsourcing To Increase Fivefold

Trade group predicts country's sales of tech and business services will hit $225 billion by 2020.

India's IT and business services outsourcing market will grow almost fivefold over the next decade to hit $225 billion in sales by 2020, according to an association that promotes the country's offshoring capabilities.

"While the short-term challenges exist, the potential for this industry is tremendous and the industry will not be demand constrained," said Som Mittal, president of India's National Association of Software and Services Companies, in a statement Tuesday.

Numerous Western businesses, including most InformationWeek 500 companies, outsource some business or tech functions to India in order to achieve savings, boost productivity, and expand their global footprint. President Obama spoke in broad terms about keeping more jobs in the U.S. during his campaign but has not imposed any measures that would inhibit the practice during his first nine months in office.

India's total outsourcing sales hit $58.8 billion in the 2008-09 fiscal year, with $46.3 billion deriving from sales to foreign customers, according to NASSCOM. Exports are expected to grow 4% to 7% in the current fiscal year but are expected to return to double-digit growth in future periods.

Most of the growth, said Mittal, will come from industries that have yet to significantly explore offshore outsourcing. "80% of incremental growth will be driven by opportunities outside current core markets, verticals, and customer segments," said Mittal.

Global industries such as tech, financial services, and manufacturing have been in the forefront of outsourcing in recent years, but others—like transportation and healthcare—represent untapped potential for India's outsourcers, a group that includes giants like Wipro, Infosys, and TCS, as well as dozens of mid-tier players.

NASSCOM said India will need to expand its tech infrastructure beyond traditional hubs such as Hyderabad and Delhi to second-tier centers like Kolkata in West Bengal in order to accommodate the growth. "Building a viable ecosystem is imperative for the growth of the sector in the region," said Mittal.

NASSCOM officials said India's outsourcing industry also needs to continue to focus on talent development, security, and trade relations in order to sustain growth.

InformationWeek Analytics and have published an independent analysis of security outsourcing. Download the report here (registration required).

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