India Cost Competitiveness

The past few years have witnessed steady evolution in the ecosystem for global sourcing. Outsourcing agencies have graduated to basing their decisions on a broader set of factors such as service level maturity, sustainability and scalability , infrastructure availability and a compatible business environment – besides the financial benefits achievable from global sourcing.India has successfully taken the benefits its fundamental advantages of abundant talent, a focus on quality and low costs coupled with a conducive business environment to attain the leadership position in this space.

This is reflected in India’s crucial and growing share of the global outsourcing pie. During FY 2001-05, India’s share in global sourcing has grown from 62 per cent to 65 per cent for IT and 39 per cent to 46 per cent for ITES.The trend is showing same reflections in the area of KPO. The notable higher preference for India is driven by its superiority when measured across a broad range of parameters that influence the choice of a sourcing location. As per a study of NASSCOM, India ranks highest from among comparing 40 sourcing destinations across the world.

The said study draws from the latest (November 2005) update of an annual sourcing location attractiveness index prepared by A.T. Kearney. The study is based upon rating accorded to the top 25 countries in last year’s (2004) analysis with their respective positions in 2005.The study further adds that the global outsourcing phenomenon will continue to expand in scope, size and scale but geographic coverage; and while most offshore markets will grow in India will remain the leading destination.

With global outsourcing demand expected to increase ten-fold, the phenomenon of expansion will continue to expand in scope, scale as well as geographic coverage. Further, India is nicely positioned to extend its leadership in the global outsourcing industry by leveraging its fundamental advantages of a large talent pool, developed depth of service offerings and demonstrated process excellence at a remarkable cost advantage. The study further adds that the global outsourcing phenomenon will continue to expand in scope, size and scale but geographic coverage; and while most offshore markets will grow in India will remain the leading destination.