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Global Economy Recovering---Offshore Industry in India Is In Upbeat Mood

With 2009 winding to the 3rd quarter, the question that haunts the whole world---is the worst in global economy over? Hopefully, a number of reports from various quarters seem to suggest that. The Indian offshore industry is in an upbeat mood following strong global cues of recovery. The 3rd quarter recorded an improved performance over the 2nd quarter and this growth in the businesses of Indian outsourcing firms is attributed to improving business sentiments across the globe.

The publication of “Market Vista: Q3 2009”--- Everest Group’s quarterly study on global outsourcing gave the Indian BPO and outsourcing sector some real reasons to smile. It has been concluded by the global consulting and research firm that the new captive set ups increased to an 18-month high in third quarter in 2009 compared to the second quarter.

According to “Market Vista: Q3 2009”: “The Indian offshore industry is growing on the back of improving demand and continued advantages of India as an offshore destination. India-centric suppliers are investing in delivery capabilities and setting up new centers,”

To put it simply: in the third quarter of the current year, there has been more business for Indian offshore industry.

The study states that though marginal (10%) there was a decline in the reported global transaction volumes. Of this IT off-shoring activities declined by 8%, whereas volume of BPO transactions decreased by 14%. But despite this, the study says, there were signs of improvement in key geographies and verticals. There has been an overall increase in the numbers of off shoring destinations worldwide and it was an 18-month high in the third quarter of 2009. While during the 2nd quarter 30 new supplier delivery centers were established, in the 3rd quarter, this number was shot up to 36. Additionally, world got her 28 new captives also in 3rd quarter.

The suppliers with strong focus in Indian off shoring witnessed higher transaction activities in 3rd quarter compared to 2nd quarter.

Of 28 new captive centers, 11 new centers were set up in India during the quarter. This happens to be the highest for a single economy. These included companies as big as Standard Chartered, Ingersoll Rand, and Kontron. In addition to this one-fourth of new supplier delivery centers were set up in India.

According to the research firm, all these were possible because Indian cities started to enjoy the cost arbitrage benefits as a result of depreciation of the currency and reduction in operating costs. If India can hold to the current momentum, the arbitrage can be sustained for 20 more years in both ITO and BPO sectors.

In an interview with The Economic Times, Everest Group Vice President-Global Sourcing Amneet Singh said that India will continue to have good growth momentum through the rest of 2009 and also in 2010. “The increase in the number of captive set ups reflect signs of recovery in the overall market. We expect the industry in India to continue this momentum in the last quarter of 2009 as well as in 2010,” said Mr. Singh.

Niyamath Parveez

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Tags: offshore, outsourcing, trends


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