New Delhi: Offshore activity will accelerate during 2005 as large service providers will expand offshore presence in India through ”cross-border” acquisitions and organic investments in cities like Hyderabad, Pune, and Chennai, which offer suitable infrastructure, research firm IDC has said.

”Expansion will be via organic investments in key locations, including India, China, and Latin America, as well as through cross-border acquisitions that can support BPO or IT outsourcing opportunities,” said ”IDC Predictions 2005: Convergence, Consolidation and Realignment as the New IT Game Plan Accelerates”.

Regarding India, cities that can offer suitable infrastructure and workforce, such as Hyderabad, Pune, and Chennai, will attract an increasing share of investment at the expense of the established centres, such as Bangalore and Delhi, which will need to be bypassed due to stresses from rapid growth, such as attrition, infrastructural challenges and overhyped conditions, it said.

Offshoring will increase as the industry races to lower its cost structure and improve its efficiency. The industry will continue to shift its capabilities and offerings closer to business process and value through greater focus on business process outsourcing (BPO).

The focus of offshore will be increasingly placed on BPO processes. These include call centre, finance and accounting as well as remote infrastructure and application management, IDC said.

Among key offshore locations, Dalian in China, will face growing pains, particularly for voice-related services as the pool of linguistically qualified (English, Japanese, and Mandarin) speakers is soaked up, pushing costs up and resulting in searches for alternatives in Northern China.

Additionally, in China, Shanghai is experiencing significant pressure, leading to increased investments in centres such as Hangzhou.

The United States will continue to dominate in the magnitude of leveraging offshore, while in Western Europe, offshore sourcing will remain a small proportion of service delivery in 2005.

Further, IDC said Independent Software Vendors (ISVs), particularly midsize, will look to increase partnership activity with offshore players. Through these partnerships, ISVs will gain access to lower-cost delivery models and potential new markets, IDC added.

from:
manoramaonline