Offshore outsourcing best way out for Indian CIOs

DQC News Bureau

Mumbai: Indian organizations facing the daunting challenge of an IT skills

shortage and 'second-class' treatment from local service providers must consider

offshore outsourcing to obtain high-end IT services, said Gartner.

"India is witnessing a severe shortage of skilled IT resources at all

levels of the IT personnel chain," said Linda Cohen, VP and Analyst for

Gartner's IT sourcing group. Demand for skilled IT personnel by initiatives like

the Indian government's recent national e-governance program (NEGP) and resource

hungry Indian offshore service providers are outstripping local supply. Rapid

economic growth in India is exacerbating the problem. Local chief information

officers (CIOs) are finding it difficult to manage the shortage of skilled local

IT resources as internal business units become even more demanding in the area

of IT requirements and schedules.

"Local service providers lack adequate focus on the Indian domestic

market, widening the demand-supply gap by not allocating enough quality

resources for Indian customers," said Cohen. "Service providers

typically allocate the best resources to their global flagship customers that

pay in dollars and yield better margins. This is particularly true with Indian

service providers".

Gartner predicts Indian companies will increasing go offshore in their

sourcing strategies, which will result in outsourcing deals offered by some

Indian companies that include higher end parts of service (for example, design

and architecture, and business consulting) delivered from other parts of the

world.

"This global sourcing model will become business-as-usual for Indian

organizations," said Arup Roy, Senior Research Analyst for Gartner's IT

services market group. "Indian companies will increasingly source IT skills

from nearby Singapore and Hong Kong. The market has already seen the first signs

of this trend. Many Indian IT firms with operations spread across the US and

Europe are now outsourcing a part of their administrative work locally".

Gartner recommends Indian CIOs to develop innovative programs for retaining

the talent they already have. Alternative sources of talent, such as recruiting

from small and mid-tier cities, should be considered. Companies must invest

heavily in training, even while knowing they will lose some of their training

investment to competitors and evaluate offshore outsourcing or staff

augmentation from other parts of the world in their sourcing strategy. This will

create a sense of competition among the local vendors, potentially increasing

their focus on local opportunities.



Consider Tier 2 and Tier 3-level Indian service providers for their key
capabilities in various aspects of IT delivery. The right provider can provide

domestic resources and perhaps a higher level of attention to issues and

demands.