software outsourcing

A blog related to software development company and offshore software outsourcing

Thursday, March 09, 2006

MNCs are making Offshore Outsourcing India face challenges

Recent survey suggests that MNCs are making Offshore Outsourcing India face challenges in the sector of Information Technology and services. These corporations have an edge for both on price factor and fro the ability also for offering services from different overseas destinations. So it is seemed that India is up against competition from these service provider companies. This list involves the brand names like IBM, Accenture, Perot Systems, Unisys and many more companies for Offshore Development. These corporations have set up services operations on Indian Territory to take benefit of the low cost, skilled and talented Indian professionals and manpower.

The fact is these MNCs in the past prefer to keep themselves away from purely Offshore Development contracts and deals. But the survey suggests that they are also now bidding for contracts that need the whole delivery of the services required to be completed from overseas destinations. Now they are also trying to post with the most possible lower rates than Offshore Outsourcing India in market. The MNCs overseas operations seem to have taken a decision to agree to lower profit margins to increase market share and compete with Offshore Outsourcing India. They are also ready to compromise with their high cost structure which has resulted from the higher salaries structure with which they used to attract staff from Indian Territory.

These companies are able to provide lower rates than Indian companies, because the expectations of the financial markets regarding their profit margins are very lower than for offshoring to the country. The margins anticipated for MNC service companies is almost less than 15%, while it seems close to 30% for Indian companies for such offers. As the scale of the overseas projects of MNCs has increased, their costs have also reduced as they are paid off over a bigger number of clients for such deals.

Offshore Outsourcing India have been expanding

As the time passes and clients gain experience and become mature in Offshore Development process, they start expanding and analyzing the option of overseas services to multiple locations, keeping eyes on both with lowering costs further and also to reduce the risk involved in such overseas deals to only single location. It seems that MNCs are more likely to bag the business and projects compared to Indian companies, as most of them already have different operations and services in a number of overseas destinations including India, China, and many more hot and demanded locations. Though Offshore Outsourcing India have been expanding outside the territory as companies are moving towards other destinations, clients are looking for a single service providers to serve their requirements from more than one destinations. Indian service providers claim that they have a global presence, but the reality is that these service providers don't have large enough operations at all these destinations.

All these could be concluded in a single line that market is tightening and competitions are increasing because of the increasing presence of MNCs for Offshore Outsourcing India.