India - 3:38 PM EST Tues., June 18, 2002
relations between Pakistan and India are giving India-based IT outsourcing
companies cause to consider relocating.
firm is MphasiS, a software and systems integrator with offices
in Santa Monica, Calif., and Bangalore, India.
winner in these IT company migrations? China. MphasiS executives
recently joined representatives of other India-based IT outsourcing
firms for a weeklong trip to China to meet with government officials.
they [Chinese government officials] are in the mode of supporting
and promoting China as a destination for IT outsourcing," said Jeroen
Tas, president of MphasiS. "It's still in the initial stages, but
most of the large Indian companies are looking to set up a presence
of its solid base of schools and technology companies, Shanghai
is being considered as a home base for relocated high-tech firms,
said Tas. One disadvantage, however, is the high cost of doing business
there, he said.
it's not a short-term thing for us," said Tas. "We're interested
in the domestic market, but it's a tough one, so the primary goal
right now is focusing on the Asia-Pacific region as a source of
companies won't be rushing to India anytime soon to negotiate new
IT outsourcing contracts, said Christine Ferrusi Ross, an analyst
at Forrester Research. "If you weren't already in the pipeline to
be a client for one of these [India-based] firms, you're probably
going to rethink your position at this time," said Ross.
however, predicts that India will remain a preferred destination
for outsourcing. But, he added, there are plenty of companies already
operating in other places, including Africa, Australia, Canada,
Ireland, Japan, the Philippines, Russia and the Ukraine.
firm IDC predicts that IT outsourcing and services spending will
reach $177.2 billion by 2004, up from $116 billion in 1999. And
Gartner Dataquest projects that the global business-process outsourcing
market, where MphasiS is focusing much of its efforts, will grow
to $543 billion by 2004, up from $208 billion in 1999.
will continue to grow for offshore [business] and, at some point,
you'll hit a ceiling despite the huge numbers of people leaving
college every year [in India]," said Tas. "So you want to spread
your risk and look to the other major sources of talent."