NEW DELHI: Global service delivery (GSD), or “offshoring,” is expected to grow during the coming 18 months, particularly among companies with three to five years of GSD experience.

According to sourcing advisory firm TPI's report on Initial Findings on the State of Global Service Delivery (GSD), the growth spurt in GSD is largely driven by expanded work activity being planned and executed at offshore locations around the world.

The growth of GSD has been largely driven by the labor arbitrage and not by productive improvements. But according to sourcing advisory firm TPI's report on Initial Findings on the State of Global Service Delivery, if productivity issues are not addressed, cost advantages are not going to last forever.

TPI India partner and MD Siddharth Pai said, “In the Indian context, the outsourcing service providers are losing their cost advantage as a result of rising salary and bad productivity. If they do not work towards increasing productivity, India would soon lose out as an attractive outsourcing destination.”

Recently, there have been media reports describing low customer satisfaction with outsourcing and offshoring. According to the report, while there is definite room for improvement in satisfaction levels for global sourcing or offshoring, the difference in satisfaction levels for in-house staff, or more traditional onshore IT consultants, is statistically insignificant.

The report also states that multinational GSD providers have emerged as a force in the growing global service delivery market. As global operations grow and mature, organizations are indicating they are more likely to select a Multi-National Corporation (MNC) service provider such as ACS, Accenture, etc. TPI believes that the surge toward multiple global locations and the broadening of activities such as infrastructure will bolster the MNCs' competitive position while placing increasing pressure on the Indian or other national pure-play providers to adjust.

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