According to a latest study on global outsourcing market, India will maintain its low-cost IT skills leverage in the offshore outsourcing market for at least another 30 years.
Global outsourcing advisory and research firm Everest said in its "2006 Global Sourcing Market Update" that the concerns related to sharp wage inflation and skill shortages leading to an adverse impact on India's offshore cost advantage were grossly exaggerated.
The US-based research agency said India's offshore outsourcing market is likely to maintain its low-cost labour advantage over the UK for at least next 30 years. The country will also retain its low-cost wage supremacy over the US for at least another 18 years, the report added.
Along with its Asian peers like Philippines, India continues to aggressively move ahead with policies aimed at minimising the adverse impact of wage inflation, it added.
Value additions to the relevant workforce, both on quality and quantity fronts, along with development of more low-cost offshore locations, the report added. After establishing its footprint in centres like Bangalore, Delhi-NCR, Pune and Hyderabad, the BPO industry is expanding into new and non-metro places like Jaipur, Lucknow and Chandigarh.
The move to two-tier cities within the country and opening of delivery centres outside India is also helping the IT service providers to lever their costs.
"Offshoring will retain a substantial labour arbitrage for the next 30 years between the UK and key low-cost destinations as such as India and Philippines," Stephen Dunn, Everest's managing principal said.
While current inflationary pressures exist, reports of 18 per cent salary growth in key destinations are overstated, he added.
There have been reports that huge salaries being paid to the BPO employees will eventually eat into India's dominance on the BPO space, while further opening the space for new competitors like China.
So far, India has been among the major destinations for global offshore outsourcing businesses. As the US and European companies continue to offshore their back-room operations and services-related businesses to low-cost overseas locations, Indian BPO industry is aiming for further market share gains in this segment.
The industry experts feel that the cost-savings benefits of the offshore outsourcing will continue to drive the sourcing decisions in the foreseeable future.
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