Indian offshoring set to soar

Indian business services and technology exports are expected to surge by 25% in the next five years.

A report by the National Association of Software and Service Companies and consultancy giant McKinsey shows India’s business services and information technology exports are expected to grow to $60bn by 2010, meaning India would possess almost half the world’s IT and business process outsourcing exports.

A growing number of UK financial services firms outsource internationally. Kent Reliance chief executive Mike Lazenby has warned that unless more financial services firms adopted offshore outsourcing, they’d be hanging on a “viability knife-edge”.

Offshoring is a political hot potato. Native economies are concerned about job losses and many are unhappy with the service they get from call centres.

Press reports over the last year have also brought to light major security issues, with accusations of workers selling UK customers’ financial details.

The NASSC report estimates 10% of the potential $300bn a year market for global offshoring is being tapped. It expects radical changes by 2015.

Matthew Vallance, European president of ICICI OneSource, a business process outsourcing company supplying the UK mortgage market, believes outsourcing adds huge value.

He says: “As the Indian business process outsourcing market matures over the next five years, we expect the number of players to consolidate to a core group of about five Indian-based companies able to offer world-class services from several locations across the world.

“We expect most efficient offshore operations will achieve cost savings of around 40% from their second year, with equivalent or better operational quality than is available domestically.”