India to remain major outsourcing destination: Mckinsey

BANGALORE: India will see lot of opportunities coming from the new markets

opening up across the globe, outside the US. Inspite of growing competition from

China and others, India will remain a major outsourcing destination globally.

The need for Indian companies to focus more on developing solutions and

products for the domestic market will increase. These were the statements that

appeared on the papers that Mckinsey & Co. presented on the topic

"Looking beyond the current economic slowdown" on the first day of

BangaloreIT.com, being held here till November 5, 2001.



According to the market research company, the US economy is expected to boost.
But it is likely that the growth rates may not scale up to the rates which the

country witnessed during 1972 to 1995. The average industry growth which was

higher than 30 per cent was driven by the fundamental growth in labor and

productivity, which was in turn related to other factors. Though Mckinsey is

optimistic that the economy will move up the line, it says the growth rates are

expected to remain less than that of 1995-2000.



The challenges, according to the company, are: too many players in the same
service is going to be a major factor. It becomes mandatory that companies look

at new growth models to achieve success in the future. Playing the same game is

a very difficult game.



Mckinsey says there is a need to be productive and develop low cost solutions
for verticals like healthcare and other segments that did not invest during the

90s.

"The Indian IT industry will have to tighten up its belt and come to

face the reality and challenges that are thrown open by the recession. There is

a need to increase business development momentum, increased participation and

involvement with key customers and emphasis on marketing and brand building

efforts," the report said.



According to the industry observers, there is a need for a change in the
business strategy and operating models of Indian companies. Mckinsey presented

four models that could help the industry to sustain during the recession and

lead them towards growth in the near future.

Adopting the globalized contact manufacturing strategy, being a sliver



system integrator, one should look at partnering with product development
companies and focus on offering innovative technology services.



Though adopting any of these models could help business to thrive, industry
observers feel companies should look at a mix and match of these models and work

in synergy to address the market.

To achieve success in the global market, companies should focus on branding

to distinguish them among global players. Companies should also focus on

offering solutions that will guarantee and help its customers a faster return on

investment. "Build a strong relationship and customer royalty with its

existing customers," says Mckinsey