US Recession and the Benefit of IT Offshore Outsource

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The slowdown of US economy may actually be a blessing in disguise for the Indian IT services sector. Experts say, it's expected to get a boost as more and more American and European companies offshore to cut costs. Buyers of IT services may actually consider increasing the percentage of their labour in offshore, lower-cost locations. India, will remain the dominant location for IT offshore services both for American and European buyers, says Gartner in its latest report.

Buyers of IT services will shift from cost containment goals to a greater focus on cost reduction and productivity increases in their sourcing decisions. "This will lead to a steady increase in the adoption and expansion of offshore services - primarily from India. Factors that will give India the edge over other offshore locations are scale and quality of labour," says T J Singh, research director, Gartner.

North American and European buyers of IT services have been the force behind a growing offshore services market and India is central to almost any discussion of offshore services delivery for these buyers.

"Whether it is the indigenous India-centric service providers that have a wide-reaching impact on the IT services sector, or a vast and growing IT labour pool being trained to support a global client base, India will continue to be the most-sophisticated country option to source offshore IT services in the near term," Singh feels.

Gartner sees two possible scenarios that will have an impact on offshore services adoption in the coming months; temporary economic downturn (best case scenario) or a more sustained recession (worst case scenario).

While in the first scenario, buyers will aggressively seek cost-saving measures by accelerating offshore delivery. In the worst case scenario, there will be more-aggressive movement to cut IT budgets.