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India to be a key BPO destination: Study

September 02, 2003 15:50 IST

India is deeply committed to the long-term success of hosting offshore operations and as technology work shifts to the country, it is likely to stay and grow, according to European analyst and consulting company Ovum.

The current backlash in the United States against outsourcing of IT jobs to the Indian sub-continent detracts from the real reasons behind the success of offshore services, it said.

IT firms across the US are enthusiastically embracing the concept, but there is growing concern among sector workers, particularly that the current trend is simply based on reduced manpower costs, Ovum said in a recent report.

"The argument they see is that their jobs have been moved to backwater economies, where the locals will work for a much lower wage packet. The reality hides much deeper issues," said Alan Pelz-Sharpe, VP (North America), Ovum.

The Indian operations doing the work formerly undertaken by US teams not only do it more cheaply, but they are often more productive and of higher standards.

The cost and quality benefits of offshore outsourcing have been well proven, with many offshore operations working to more rigorous quality methodologies than is common in US operations, he said.

Implications would have a wider reach than the technology sector alone as proposals had already been floated to offer tax breaks to companies who keep their staff on US soil, and to penalise those who outsource offshore, he said.

In a recession, with high unemployment rates such a visible and high profile loss of jobs was going to become a major issue for Washington to address.

"Yet developing efficient, low-cost offshore delivery models, is one of the ways US companies can remain competitive in the global marketplace."

"Difficult questions which no-one likes to acknowledge will have to be faced. Until they are, the future of tech in India is looking rosy," he said.

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