Indian pure play software vendors like TCS, Wipro, Infosys, Satyam, Cognizant and HCL Technologies are dominant global leaders in offshored services. This is the finding of a market survey on offshore outsoucing by MetaSpectrum, part of the Meta Group.
Making a clear distinction between offshoring and outsourcing of services, the report compares the market dynamics between pure play vendors with their offerings and players in the US who have offshored to give clients the advantages of efficient labour at a reduced cost.
Outsourcing and India: Complete Coverage
Companies like IBM Global Services and Accenture are some US companies who with their offshore capabilities in India can pose a significant challenge to Indian third party vendors.
In fact, the report, which places these two biggies in the challenger space of the market, says the area reflects a merging of offerings between the two spaces. This is converse to how they began. Then third party vendors had the technical upper hand and companies with an offshore presence (MNCs) had the brand name.
Some of the reasons offered for this change is that offshore pure play vendors restirct themselves to the vertical space and do not go beyond client requirements. They lack a consulting expertise and do not involve themselves in elements like the supply chain where other industries interact with the client.
Apart from call centres, the report states that most other services are in the embyronic state and lack anything resembling maturity.
Though many vendors meet client requirements, this is generally specific to the client rather than having the semblance of any industry standards. These are the gaps where Indian third party vendors lose out to more traditional service providers like IBM and Accenture.
The report warns that in the challenger segment, brand could be the defining issue and vendors who fail to pursue brand building in the next two years will be swallowed by bigger players.
The same fate awaits companies who are classified in the follower segment. Without a clear differentiation, most of these companies will cease to exist as competition increases and the international business situation remains unstable.
Some of the activities taken up by third party vendors to meet competition are adding to their skill sets consultative and strategy services along with infrastructure and application services.
They are also working on expanding their presence and hiring local staff at different locations. The report also downplays the fear of a political backlash on offshoring and adds that 'public perception' of offshoring is the thing to keep an eye on in the future.
The report sees immediate market growth taking place at 20 per cent in application development and maintenance. Packaged application services are foreseen to grow at 40 per cent on a smaller base.
