India Corners 88% Of US Market For Securities Outsourcing In 02

Bangalore: | Updated: Jun 25 2003, 05:30am hrs
India might still be getting a tiny portion of the total outsourced software business from the US but it has been successful in acquiring 88 per cent of the total offshore outsourced work from the US securities industry (stock market brokerage sector) in the year 2002.

According to a recently released analyst report of the US-based research firm, Tower Group, Indias share of the offshore outsourcing head count was 88 per cent (of total outsourced work from US securities industry) in 2002 and is expected to rise in 2003 to 92 per cent. However, the share will climb down to 84 per cent in 2005 as US companies/institutions will use other offshore locations like China and Russia.

The Tower Group is a Boston-based research and advisory firm exclusively focussed on the global services industry. The firm also has offices in New York, London and Kuala Lumpur.

The report said almost all bulge-bracket broker/dealers had utilised the services of at least one Indian offshore vendor, and leaders like Morgan Stanley and Merill Lynch were moving to the next degree of sophistication in employing the offshore option. While on the other side, all major Indian vendors were bolstering their marketing efforts in the securities industry even as specialists such as i-flex and Syntel focus over 40-50 per cent of their time and efforts on serving securities firm, the report added.

The Tower group, however, also warns of growing competition for Indian vendors in securities software outsourcing market. While vendors from other countries (eastern Europe, southeast Asia, Russia and China) will not pose a major threat until 2005, collectively they represent a powerful alternative to the Indian vendors, and some will even offer lower cost options. Indian vendors will definitely feel the heat from Chinese vendors such as Kingdee and Neusoft and will need to consider acquiring some of them before they become goliaths, the report said.

The report added that IT staff in the US brokerage industry is estimated to decline from 58,766 in 2002 to 47,203 in 2005, mainly due to mandated cost cuts to get expenses in line with top line growth.

However, headcount of offshore vendors and the offshore staff of US vendors serving the US securities industry would grow by 32 per cent from 11,631 in 2002 to 26,944 by 2005.

The Tower group has also mapped Indian vendors operating in the financial market. The firm has ranked Tata Consultancy Services (TCS), Infosys, Wipro, i-flex and Syntel high in terms of domain expertise in capital markets and for having breadth of general offshore outsourcing services.