By Steve Ranger, 11 January 2007 15:25
NEWS
Indian offshoring companies continue to gain more and more momentum in the outsourcing market.
IT services companies such as Infosys, TCS and Wipro are reaping the benefits of the trend towards single-process and specialist deals, and gradually eating into the market share of the traditional services companies.
In 2006, the India-based providers won seven per cent of the total market share - compared to the mere 0.5 per cent they had in 2002.
The Indian companies are particularly successful in the applications development and maintenance (ADM) sector, having grown their market share from eight per cent in 2003 to 36 per cent in 2006, according to the research by outsourcing advisers TPI.
In contrast, the 'Big Six' IT services providers - Accenture, ACS, CSC, EDS, HP and IBM - have seen a decline in their market share from 76 per cent of the ADM market in 2003 to just 38 per cent in 2006.
TPI's EMEA managing director Duncan Aitchison said the shift shows a maturing of the Indian providers, who are taking an incremental approach and signing a large number of small, specialist contracts.
He said in a statement: "India-based providers are clearly considered an attractive and credible alternative to traditional players and over the next few years we expect to see them competing directly with the Big Six for larger value contracts."
Apart from the success of Indian offshorers, there are other pressures on the outsourcing market. According to TPI the fourth quarter of 2006 was the worst fourth quarter in five years in terms of the value of outsourcing contracts awarded.
On top of this the value of new outsourcing contracts, excluding retenderings, dropped by eight per cent on 2005 levels.
But the shift to shorter and smaller contracts means tendering remained "frenzied", with a record number of contracts (350) being signed in the year - beating 2005's 341, the previous record.
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1. Mark Kobayashi-Hillary
We are seeing a huge shift in IT services and the establishment of a global level playing field. The Indians have already started to establish credibility and respect as high-value high-quality outfits, but as time goes on it is highly likely that they will surpass (or purchase) some of the more established companies we turn to today for IT advice/projects. This is not all about 'jobs to India...' it is about these Indian companies now becoming true MNCs and hiring in Europe, US, and wherever their customers are located...