Offshore outsourcing must for Indian cos

Indian organizations facing IT skills shortage and second-class treatment from local service providers must consider offshore outsourcing, advices research and advisory firm Gartner Inc.

Demand for skilled IT personnel is exceeding local supply with rapid economic growth aggravating the problem, observes Gartner. Local chief information officers (CIOs) find it hard to manage the shortage as internal business units become even more demanding in the area of IT requirements and schedules.

"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 of Gartner's IT sourcing group.

The challenges and market conditions require Indian CIOs to look beyond the limits of their own geographical boundaries, much like their Western counterparts.

Gartner predicts that Indian companies will increasingly go to 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, adds Roy who cites the example of the Indian embassy which outsourced its visa collection and delivery services to a US company.

"Many Indian IT firms with operations spread across the U.S. and Europe are now outsourcing a part of their administrative work locally."

Gartner recommends innovative programs for retaining talent and alternative sources of talent like recruiting from small and mid-tier cities. It also suggests evaluating offshore outsourcing or staff augmentation from other parts of the world to create a sense of competition among the local vendors, potentially increasing their focus on local opportunities.