UK businesses maintain IT love affair with India

LONDON, UK: The love affair between UK business leaders and Indian IT service providers shows no signs of waning, and nor does the popularity of India as a global sourcing destination, according to the findings of a national UK study.

The ‘Outsourcing Service Provider Performance Study 2007/08’, undertaken by leading independent sourcing advisory firm EquaTerra, reveals that 100 percent of UK businesses currently offshoring all or part of their IT functions are using India as one of their locations, and are planning to continue with this strategy.

The study also indicated a strong degree of client satisfaction with Indian companies in comparison to more traditional US or European based service providers.

“Business people are making the decision to outsource to India because they can’t find the same resources in the UK” said Phil Morris, Managing Director of EquaTerra Europe.

“Indian firms such as Wipro and TCS are achieving real satisfaction in providing skills, flexibility and quality of work and the globalization of services will require larger, more global suppliers such as Accenture, IBM and HP to reposition their overall delivery models and structures in order to keep pace with newer market entrants” Morris said.

The study, undertaken annually, evaluates £34 billion worth of UK IT sourcing contracts. This is equivalent to three-quarters of the total current UK IT sourcing market and covers more than 300 unique client-provider relationships and twenty service providers.

The ‘Outsourcing Service Provider Performance Study 2007’,researched 110 of the top IT spending contracts in the UK and explored their perceptions of their outsourcing providers, their satisfaction with performance and their plans for future contracts. Study participants are senior level representatives (CFO, CIO or their direct report) within client companies, who outsource all or part of their IT functions and processes.

This year’s results further support the 2006/07 findings, which indicated that Indian service providers are steadily increasing their profile and popularity among UK IT decision makers. The latest research shows clearly that they have made even greater strides in the past 12 months, establishing themselves as very serious competitors for the major US and European outsourcing providers, with four out of the top five service providers ranked in client satisfaction, being Indian-based companies.

Perhaps, most worryingly for the traditional outsourcing providers, quality and flexibility are being seen as the most important attributes influencing customers’ satisfaction, and the study shows that Indian providers frequently outscore their established global counterparts in these rankings.

Additionally, the findings show that global sourcing is rapidly becoming an essential business option for UK organisations in all sectors who participated in the study, with a significant increase in organisations utilizing near or offshoring within the last year from 47 percent to 57 percent of study participants.

Outsourcing generally is also still increasing in the UK with 54 percent of those questioned planning to up their activity. Only 9 percent predicted that they will outsource less.

The study findings illustrate that cost is still the primary driver for many of the organisations who participated in the study, but over half (54 percent) are now outsourcing for other reasons such as availability of skills, flexibility and quality of work.

Further results indicate that:

* Despite the current high profile of China as a key global sourcing destination, only 5 percent of the leading IT organizations in the UK, who participated in the study, are currently utilizing the region for this purpose.

* Business Process Outsourcing (BPO) is increasing, but at a relatively slow pace with a 5 percent increase on last year (26 percent to 31 percent).

* Real dissatisfaction with outsourcing is rare, occurring in only 14 percent of the contracts evaluated in this study.

* A multisourcing environment, as oppose to sole sourcing, tends to lead to higher satisfaction rates.