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Global Economics

Rivals Gain on India in Offshoring

China, Eastern Europe, and Morocco are grabbing outsourcing share from the subcontinent as an overheated labor market means fewer centers are opening there

India is losing its stranglehold as the offshoring destination of choice as China, Morocco and Hungary gain ground.

Fewer global delivery centres were opened in India by the UK's 20 largest IT services suppliers than in each of the three countries over the last year.

The competitive Indian labour market is driving companies to alternative destinations, say Pierre Audoin Consultants (PAC) in its report.

The 20 largest UK companies analysed in the report included Accenture, BT Global Services, Capgemini, Capita, CSC, EDS, Fujitsu, HP, IBM and Logica.

Of the 21 centres opened since January 2007 by the big 20, only two were in India, while four were in China, with three were Eastern Europe and Morocco respectively.

Nick Mayes, senior consultant at PAC, said there is no "serious threat" to India's outsourcing dominance in the short term but companies are looking to reduce their reliance on "India's heated labour market".

China's emergence as a global sourcing hub has traditionally been slow but the report found that BT Global Services, EDS, IBM and Tata Consultancy Services (TCS) have all opened sourcing facilities in the country in the last 18 months.

The two facilities launched in India were both outside the traditional hotspots of Bangalore and Mumbai -- IBM's new centre in Noida and TCS's expansion site in Hyderabad.

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