Not many global IT majors have started recoiling yet, but the recent decision of Apple Computers to shut down its new Bangalore center and local news about Intel planning to lay off a number of people from its Indian operations have sparked fears that rising cost may have started threatening India’s attraction as an IT offshoring destination.?
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And although the Indian IT sector has shrugged off these two developments as just “internal corporate decisions,” many are worried that rising cost pressures — which are showing signs of lasting for a while — may end up in some lost opportunities and may even blunt the competitive edge of offshoring IT in India.

“As the Apple story points out, India’s first-mover advantage is gone — at least in established city centers like Bangalore,” said Michael Corbett, executive director of The International Association of Outsourcing Professionals, the global organization for the outsourcing profession. “The marketplace dynamic of supply and demand is resulting in rapid salary inflation, high turnover, and other forms of cost escalation, which may end up in some lost opportunities for the Indian IT.”?
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He added that other competing countries like Philippines, China, Russia and Eastern Europe “will exploit India’s growing pains to improve their competitive posture,” and could even give India a run for the money.

http://www.wpherald.com/storyview.php?StoryID=20060616-104129-1872r

[tags]offshore outsourcing, offshore, india, eastern europe[/tags]