India Rising

India emerged as the favourite outsourcing destination for businesses in UK, as organisations rated India-based outsourcing firms highest in terms of satisfaction, placing them above ‘traditional’ global providers in a survey of UK’s public and private sector firms.

According to the Outsourcing Service Provider Performance Study 2007, conducted by sourcing advisory firm EquaTerra, all UK businesses currently offshoring all or part of their IT functions use India as one of their locations, and plan to continue with this strategy.

The study, undertaken annually, evaluates £34 billion (or about $66.7-billion) worth of UK IT sourcing contracts, about three-quarters of the total UK IT sourcing market. Satisfaction levels were found to be highest for India-based outsourcing providers, with ‘traditional’ global providers ranking low, the study said.

India’s largest IT services firm, TCS, was ranked highest in terms of satisfaction by respondents, just ahead of Wipro and Satyam. Infosys was ranked fifth, behind Unisys.

“India-based firms such as Wipro and TCS are achieving real satisfaction in providing skills, flexibility and quality of work and the continued globalisation of services will require larger, more traditional suppliers such as Accenture, IBM and HP to reposition their overall delivery models and structures in order to keep pace with newer market entrants,” said EquaTerra global sourcing & APAC director Sridhar Vedala.

The region closest to India in terms of popularity as a global sourcing destination was Eastern Europe, with 25% of organisations using it as an outsourcing destination in 2007, against 17% in 2006. “Despite the hype around China, UK businesses are not yet offshoring there to a significant degree,” the study pointed out. Only 5% of organisations surveyed use it as an outsourcing destination.

The study also found that outsourcing is on a rise in the UK. While the percentage of UK organisations using global sourcing increased to 57% in 2007 from 47% in 2006, 54% of organisations also said they are looking to outsource more in future.

Another 13% said they will start outsourcing. While cost remains the main driver for outsourcing for many of the organisations who participated, over half the respondents said they are now outsourcing for other reasons such as availability of skills, flexibility and quality of work.