India firms to spend more on outsourcing

Majority of Indian enterprises will invest more on IT outsourcing within next two years, in attempt to reduce operational costs, says Springboard Research.
Written by Konrad Foo, Contributor

A majority of Indian enterprises will increase their investments in IT outsourcing within the next two years, a new survey revealed.

According to the Springboard Research study released Friday, 65 percent of IT decision makers in Indian enterprises planned to increase their IT outsourcing budget during this period.

Another 29 percent of the 107 CIOs polled from large enterprises in India, expected their investment to remain constant in the same period.

With 84 percent of Indian enterprises expecting a significant impact on their IT budgets due to the current economic climate, this budgetary pressure was a core driver for the acceleration of investments in IT outsourcing.

It is for the same concern, that a third of respondents reported withholding or delaying IT-related investments and increased cautiousness with IT investments.

Sudip Saha, senior research analyst for IT services at Springboard Research, said the economic slowdown creates an opportunity for CIOs to manage their costs.

"They have shown an open-minded approach towards IT outsourcing, further accelerated by an emerging emphasis on improving business performance," he said in the report.

Respondents also ranked vendors in the various services markets on engagement satisfaction and market penetration. In the US$2.6 billion infrastructure services market, CMS and HCL Comnet achieved the highest such ratings, while Wipro and IBM held leadership positions in both market penetration and engagement satisfaction.

In the US$2 billion application services market, two India-based vendors--TCS-CMC and HCL--received leadership ratings for engagement satisfaction and market penetration rankings.

IBM and Accenture dominated the rankings in the IT consulting market.

According to the report, end-users perceived IBM, Wipro and TCS as leaders across all service categories. Respondents based their perception on brand name, global presence and expertise.

However, Springboard noted a gap between perception and reality. The local Tier 2 service providers, while having a large presence across the different categories mentioned in the report, were never considered as leaders by their domestic enterprise customers.

"This serves as a further wake-up call to the Indian service providers, highlighting the need to invest in an approach that will communicate their capabilities and quickly change the way they are perceived in the market," said Phil Hassey, vice president of services research at Springboard, said.

Based in Singapore, Konrad Foo is an intern with ZDNet Asia.

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