India top choice for UK outsourcing

India is now outstripping competitors worldwide for cost and service quality and is riding the crest of a revolution in global outsourcing, according to a report.

The report by advisory firm EquaTerra, entitled the Outsourcing Service Provider Performance Study, surveys senior company figures involved in outsourcing.

It found most UK businesses that offshore IT are now choosing at least one provider in India.

Indian outsourcing companies were ranked in four out of the top five positions for client satisfaction in the survey of 320 of the UK's top IT spenders.

The number of UK organisations nearshoring or offshoring leapt from 47 per cent to 57 per cent last year - with all of them offshoring some or all of that work to India. More than half (54 per cent) of businesses surveyed said they are planning to up their outsourcing this year.

Special Report: Inside India

In February last year silicon.com's Steve Ranger visited the Indian tech hotspots of Bangalore, Mumbai, Pune and Hyderabad. Click on the links below to see photo galleries of the cities and companies visited.

♦ Satyam's IT campus
♦ Hyderabad's tech parks
♦ Bringing tech to rural India
♦ High-tech on the streets of Pune
♦ Pune - the new Bangalore?
♦ Boom town Bangalore
♦ Bangalore's Electronics City
♦ SAP and Wipro in Bangalore

Phil Morris, MD of EquaTerra for Europe, predicted growth in UK outsourcing of IT and business processes would continue for at least a decade as increasing numbers of companies are won over by low costs and high quality of service.

But offshoring IT is not costing British workers he said, as the UK does not have enough trained workers to fulfil demand.

He told silicon.com: "India offers all of the economic advantages that companies are looking for, the legacy of an education system and somewhere where there is relatively good English.

"I think the market has got major growth potential for the next 10 years, this is an area where people keep finding different areas where it can offer advice, help and support from different locations and different business structures. We are seeing a kind of Industrial Revolution sweep through the services landscape in the same way it did with manufacturing."

He added: "This is all being driven by technology, the speed of processors and telecommunications together with cleverer application interfaces and graphical user interfaces."

He said global suppliers such as Accenture, HP and IBM would have to play catch-up to match the skills, flexibility and quality of work of Indian firms such as Infosys, TCS and Wipro.

China is only being used as an outsourcing destination by five per cent of UK companies but Morris forecast the rise of outsourcing providers in other countries in Asia, South America and Africa.

Cost remains the primary motivation for IT outsourcing but 54 per cent of companies are now turning to it for skills, flexibility and quality of work.