BANGALORE: The Mumbai terror attack of 2008 created a term that is increasingly coming into the lexicon of IT outsourcing, ‘ India plus one’. Some attribute the origin of that term to Forrester Research , which, following the terror attack and the Satyam scandal, recommended that companies should derisk by spreading their outsourcing operations beyond India, to at least one other country.
Recently, Hewlett-Packard’s VP of enterprise services Robb Rasmussen said in an interview to CIO.com that a lot of HP clients want an India-plus-one strategy. “Historically, they’ve had a presence in India, but to mitigate risk,they’d like to have some assets somewhere else,” he said.
Tom Georgens, CEO of storage company NetApp , told TOI last month that the company needed to diversify from India, which is currently its second biggest site, the first being its California headquarters. “There are risks of inflation, the infrastructure may not catch up, and there are any number of things that are beyond our control,” he said.
India currently dominates the outsourcing market. A survey by Capgemini, in partnership with Harris Interactive, which was released in September this year, found that more than 60% of the US companies surveyed were outsourcing to India. China came in second at 27% and Latin America at 25%. Most estimates indicate that India has well over a 50% share of the total outsourcing market.
But current trends suggest this figure will come down. John C McCarthy, VP and principal analyst in Forrester Research, says clients are increasingly looking at an India-plus-one strategy to hedge geopolitical risks.
Firms are also seen to need to curry favour with local governments for local licenses and business, and with more and more countries jumping on the offshoring bandwagon and offering themselves as competitive locations, global firms are being compelled to give some of the outsourcing business to those geographies.
Siddharth A Pai, MD of IT consulting firm TPI, says many global customers are looking at an I2+1 strategy, two India locations (one a main city like Bangalore or Chennai and the other a tier II or tier III location like Mysore or Noida) and another geography.
“Customers today are asking for such combinations. That’s because costs are going up in India, and customers want to mitigate geopolitical risk. Besides, alternative geographies are emerging,” he says.
Amongst alternative geographies, a popular destination is China. Given that many companies are looking at tapping its massive domestic market, offering a share of the outsourcing pie is clearly a way to get the local government to make its entry smoother. NetApp’s Georgens said China churns out a number of engineers, and it is a big market. “Though language is an issue, we have to pay attention to China,” he said.
Forrester recently put out a list of countries that are potential offshore alternatives to India. That list comprises of Argentina, Brazil, Mexico, Eastern Europe (Baltics, Poland, Czech Republic, Hungry, Romania, Bulgaria, Slovakia, Ukraine), Egypt, Russia, Malaysia, Philippines, Vietnam and China.
Source:-BANGALORE: The Mumbai terror attack of 2008 created a term that is increasingly coming into the lexicon of IT outsourcing, ‘ India plus one’. Some attribute the origin of that term to Forrester Research , which, following the terror attack and the Satyam scandal, recommended that companies should derisk by spreading their outsourcing operations beyond India, to at least one other country.
Recently, Hewlett-Packard’s VP of enterprise services Robb Rasmussen said in an interview to CIO.com that a lot of HP clients want an India-plus-one strategy. “Historically, they’ve had a presence in India, but to mitigate risk,they’d like to have some assets somewhere else,” he said.
Tom Georgens, CEO of storage company NetApp , told TOI last month that the company needed to diversify from India, which is currently its second biggest site, the first being its California headquarters. “There are risks of inflation, the infrastructure may not catch up, and there are any number of things that are beyond our control,” he said.
India currently dominates the outsourcing market. A survey by Capgemini, in partnership with Harris Interactive, which was released in September this year, found that more than 60% of the US companies surveyed were outsourcing to India. China came in second at 27% and Latin America at 25%. Most estimates indicate that India has well over a 50% share of the total outsourcing market.
But current trends suggest this figure will come down. John C McCarthy, VP and principal analyst in Forrester Research, says clients are increasingly looking at an India-plus-one strategy to hedge geopolitical risks.
Firms are also seen to need to curry favour with local governments for local licenses and business, and with more and more countries jumping on the offshoring bandwagon and offering themselves as competitive locations, global firms are being compelled to give some of the outsourcing business to those geographies.
Siddharth A Pai, MD of IT consulting firm TPI, says many global customers are looking at an I2+1 strategy, two India locations (one a main city like Bangalore or Chennai and the other a tier II or tier III location like Mysore or Noida) and another geography.
“Customers today are asking for such combinations. That’s because costs are going up in India, and customers want to mitigate geopolitical risk. Besides, alternative geographies are emerging,” he says.
Amongst alternative geographies, a popular destination is China. Given that many companies are looking at tapping its massive domestic market, offering a share of the outsourcing pie is clearly a way to get the local government to make its entry smoother. NetApp’s Georgens said China churns out a number of engineers, and it is a big market. “Though language is an issue, we have to pay attention to China,” he said.
Forrester recently put out a list of countries that are potential offshore alternatives to India. That list comprises of Argentina, Brazil, Mexico, Eastern Europe (Baltics, Poland, Czech Republic, Hungry, Romania, Bulgaria, Slovakia, Ukraine), Egypt, Russia, Malaysia, Philippines, Vietnam and China.
