IT companies in favour of adopting onshore model

The IT sector’s biggest customers have revised their strategy around outsourcing and are debating whether to shift some outsourcing projects onshore. This is a development that has the potential to make the offshoring versus onshoring debate irrelevant. With automation having the potential of reducing costs by as much as 80% in commoditized service lines such as computer infrastructure management, customers of Indian IT are starting to consider moving more projects to onsite locations.

"When you have the potential to automate certain projects, what difference does it make whether that project is onshore or offshore? It makes that debate irrelevant," said a chief information officer of a European bank that outsources projects to one of India's top three software firms.

The development, if it kicks off consistently, will signal a considerable shift for Indian IT firms such as TCS and Infosys. These companies which have for years thrived on the offshoring model where they built large campuses to house thousands of engineers to help bring down the cost of software development and maintenance.

The emergence of robotics automation has the potential to disrupt the traditional "pyramid model" of Indian IT. The sector's top companies such as TCS, US-based Cognizant and Infosys are investing heavily on building tools and platforms that can afford large-scale cost benefits to demanding customers who are being thrifty as far as technology-spending budgets are concerned.