India's IT outsourcing to pick up next year

BANGALORE, INDIA: Though India’s IT outsourcing is expected to remain subdued this year, it’s likely to pick up during the second half of the next year as majority of the companies would be looking to reduce cost, says a study by Springboard Research.

The study revealed that about 84 per cent of the Indian enterprises expected a significant impact on their IT budgets due to the current economic downturn, with budgetary pressure being a core driver for this acceleration of investments in IT outsourcing, said a press release.

According to the study, named ‘Inside the End-Users’ Mind - India IT services demand side analysis’, the Indian IT services market is expected to grow from $4.1 billion in 2007 to $8.1 billion in 2011, recording a CAGR of 18.6 per cent. It added that 65 per cent of the IT decision makers in Indian enterprises expect an increase in their investment in IT outsourcing by their company in the next two years, with 29 per cent expecting investment to remain constant.

“For CIOs (chief information officers), the the economic slowdown is clearly an opportunity to manage their costs and they have shown an open-minded approach towards IT outsourcing,” said Sudip Saha, senior research analyst for IT services at Springboard Research.

He added that many of the Indian companies will not be able to cut down on costs with their internal IT teams and would be looking at outsourcing for budgetary controls.

Furthermore, highlighting these budgetary concerns, over a third of all respondents have reported withholding or delaying IT-related investments and increased cautiousness with IT investments.

The findings are based on a survey of 107 CIOs of large enterprises (employing more than 1,000 people) in India.