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Offshoring is the fastest growing IT segment

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CIOL Bureau
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NEW DELHI: Gartner has labeled offshore outsourcing as the world's fastest growing IT industry segment. This growth is a result of the 29 percent CAGR of the Offshore IT Services segment and the 68 percent CAGR of Offshore BPO, from 2002 through 2007.

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'The significant cost saving typically associated with global sourcing and continuing economic malaise in the US has created extraordinary interest among enterprises for cross-border service delivery options. Consequently, this market segment is among the few, globally, that is getting venture capital and private equity funding,' said Gartner APAC Senior VP Bob Hayward.

Gartner has labeled Global Sourcing an 'irreversible mega trend' and a clear indicator is the increase in the number of potential 'nearshore-offshore' options available today. While in the past India emerged as destination of choice, there is now a consolidation at an international level with tremendous current and latent options for customers.

Commenting on the global services landscape, Gartner VP & Research Director - Offshore Sourcing Rita Terdiman said, 'The early adopters among North American Enterprise buyers consistently turned to Indian ESPs however, over the last six months, this has started to change. Vendors worldwide have begun to leverage the cost arbitrage and new vendors are now appearing on the customers' Request For Proposal (RFP) list. Each category of vendors comes from a different heritage and has a unique set of competitive 'assets'. Going forward what will emerge is a set of 'global players' rather than the notion of U.S. or Indian Vendors.'

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A similar trend is seen with the top ten BPO outsourcers, where through 2004, most US based External Service Providers (ESPs) will establish or expand their capabilities offshore to compete effectively on cost (0.8 probability). These organizations will endeavor to develop a stronger multiprocess focus, while their investment in cross-border service delivery will provide them with required resource leverage.

Given the increased interest in outsourcing overseas, Debashish Sinha, Principal Analyst - Offshore BPO, Gartner said, 'What we will now witness is a trend wherein the large, global players acquire smaller companies with knowledge of local (offshore) resource pools, culture and business practices. Many providers are evaluating acquisitions/joint ventures of smaller outsourcers looking for exit options.'

(CNS)

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