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Fortune 1000 CIOs presage great year for outsourcing

Sanjay Krishnan in Hyderabad | April 06, 2004 08:54 IST

Forget the outsourcing backlash. This financial year could well turn out to be a great year for outsourcing if a Morgan Stanley survey of Fortune 1000 CIOs (chief information officers) is to go by. And TCS and Cognizant can smile because the two have been rated as having the best execution capability among all offshore players in the Morgan Stanley survey.

Contrary to perception that only the Big 4 in the Indian offshore space -- TCS, Infosys, Wipro and Cognizant -- dominate the offshore market, the survey indicates IBM to have garnered a significant piece of the mindshare of CIOs when it comes to offshoring.

Outsourcing and India: Complete Coverage

The survey has concluded that 25 per cent of the Fortune 1000 CIOs plan to spend on offshore IT services with a forecasted 3 per cent growth in their IT budgets for 2004. The spend is likely to be across technology segments including hardware, network equipment, software and outsourced services.

After ratings by Gartner and Meta, leading research agencies, where the Indian offshore players made it big this is probably for the first time, TCS, Infosys, Wipro and Cognizant are seen amongst the best globally by CIOs of Fortune 1000 corporations.

In the latest Morgan Stanley survey of Fortune 1000 CIOs, where over 225 CIOs participated, Cognizant, TCS, Wipro and Infosys figure prominently.

In this survey, Cognizant and TCS are seen to have demonstrated the best execution capability amongst offshore IT service providers, closely followed by Infosys. Wipro though has been rated the lowest in terms of execution capability. The survey, which includes all global IT services players, lists IBM as having the best execution capability, followed by CSC, EDS, Accenture and Unisys.

Interestingly multinational marquee names like Cap Gemini, Hewlett-Packard and Keane have been rated lower than Cognizant and TCS. Wipro, which has had a number of fixed-bid projects slipping on cost and time, and a couple of reported mishaps on the BPO front with Lehman and CapitalOne, was pushed to the lowest rung of the pecking order of the Global 12 players listed.

But, Wipro has emerged the second favourite in the list of CIOs wanting to use offshore services, after IBM, followed by Cognizant, Infosys and TCS. Accenture, EDS and Keane follow these players.

"For 2004, IBM, Wipro, and Cognizant should capture the highest demand for offshore IT Services, closely followed by Infosys and Tata Consultancy Services. Accenture, Keane and EDS should experience relatively less offshore IT services demand," the report says.

"Our CIOs expect IBM, Wipro, and Cognizant to capture the highest offshore IT services demand, followed closely by Infosys and Tata Consultancy Services," the report points out.

In the new business segment 62 per cent of CIOs plan to buy new business software, with Hyperion expected to experience the greatest demand, followed by SAP, Cognos and Business Objects.

In the packages software area, 56 per cent of the CIOs plan to buy packaged CRM software with Microsoft and SAP likely to capture the strongest demand, followed by PeopleSoft, Siebel and Oracle.

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