Indian IT firms brace for US slowdown

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: model— onsite or near-shore delivery with offshore presence—likely to emerge the winners.

So, what has made the industry observers and analysts to be optimistic about offshoring in difficult times? It is the adaptability of the Indian IT firms to the hybrid model and also to embrace different service lines and go in for geographic diversification that has a big positive impact on the industry. For instance, Indian firms looking to offer remote infrastructure and management to compete with its global peers and also looking beyond the Indian labour market to eastern Europe, Latin America and China would help them to sustain their revenue graph. Also, with uncertain global macro-economic environment, wage inflation may ease during 2008 as Indian firms reduce hiring and increase utilisation rates, while global IT majors show a reduced sense of urgency in ramping up their India operations.

The biggest driver of the Indian IT firms is that they enable their customers to focus on core businesses and allow them faster time to market as delivery teams can work around-the-clock, providing cost effectiveness. “The billing rate of a local resource is roughly 7x the rate of an offshore resource. The flexibility and capacity of the global service delivery model facilitates worldwide recruitment and enhances the scalability of the service offering to expand and contract with customer demand. Initially, commoditised services, such as application development and maintenance, comprised a large portion of outsourced IT services work, but now, a number of higher end services, such as systems integration and IT consulting, are being done offshore,” says the report. Anyway under 20% of the offshoreable market opportunity for IT services have been captured to date.