Indian outsourcers to launch European invasion

Offshore suppliers to win onshore contracts in 2006, says National Outsourcing Association

Indian IT companies will build on their offshore outsourcing base and go head-to-head with traditional western IT firms for more "onshore" contracts in Europe during 2006, according to the UK's National Outsourcing Association (NOA).

In its predictions for 2006, the NOA sees the emergence of a global delivery model where the offshore Indian suppliers either open up European centres or acquire European IT services companies.

That will allow the Indian companies to compete for onshore contracts in the UK and Europe by developing a model that will split the services they offer between 60 per cent offshore and 40 per cent onshore.

Martyn Hart, chairman of the NOA, said: "Indian outsourcing providers are starting to think about the UK market from a western perspective. Companies are no longer in the solely onshore or offshore mind-set - they are more open to using a blend of sourcing options to achieve the best result."

Just last week Indian supplier HCL Technologies fended off stiff competition from two UK and international IT companies to win a £150 million (US$268 million) outsourcing deal with high-street electrical retailer Dixons Group International.

Businesses will also start to use offshore outsourcing in a more targeted way, moving away from a "whitewash" approach to choosing specific locations for specific functions, according to the NOA.

Africa is also predicted to emerge in 2006 as a viable offshore location for some services with fledgling industries in Ghana, Kenya and Nigeria joining the booming South African business process outsourcing market.

Hart said: "As people use outsourcing in a more targeted and bespoke way, so outsourcing programmes become more successful."

Andy McCue of reported from London.