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How India's IT outsourcing leaders can stay on top

Stephanie Overby | May 21, 2013
After a decade of double-digit growth, India's offshore IT outsourcing leaders must shift strategies if they want to continue to dominate in technology services as growth slows in a maturing market. Here are six things Indian outsourcers need to do to grow.

"The India-heritage Tier 1 [providers] have recognized that growth of some of their highly commoditized services is threatened and they are dealing with it in various ways," says Bhatia. "They are growing their non-Indian employee base at a faster rate and performing strategic acquisitions outside India to reduce the leakage of their business to smaller onshore competitors."

"The future is going to be less about selling the low-end work, but the more complex IT-enabled business processes that are specific to industries. Hence, the investments the providers need to make are going to be in more consultative talent and specific technology IP," says Fersht of HfS Research. "And you can't find all of that for cheap rates in a third-tier Indian city."

2. Crack the Public Sector
Protectionist legislation will continue to inhibit India's growth in public sector IT outsourcing, but some opportunities exist. "Public sector contracts are large, complex deals are expensive to win, but they are also sticky and profitable," says ISG's Keppel.

3. Spend That Cash
Some Indian providers are setting aside significant portions of their reserves to invest in newer, less commoditized IT services--those that sit at the intersection of IT and the business or incorporate social, mobile, analytics, or cloud computing, says Bhatia.

4. Embrace Automation
Indian providers must break the mold of linear growth that requires greater investment in full-time employees in order to increase revenues, says Fersht of HfS Research. "This means more investments in automation and business platforms that can increase work volumes without increasing staff numbers.

5. Sell to New CXOs
Indian providers looking for new business ought to look beyond the CIO's office. "Taking leadership positions in newer trending areas is giving them the ability to expand their footprint at existing clients by selling services outside of the CIO's organization," says Bhatia.

6. Go BPO
Business process outsourcing, IT outsourcing's younger cousin, remains a higher-growth area. India currently holds about 36 percent of the market, according to ISG, leaving plenty more to acquire. "Sustained growth will require not just success but dominance of the BPO market," says ISG's Keppel.


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