India retains IT outsourcing popularity

9 January 2009

9 January 2009

India continues to be the most popular place for the world's largest IT firms to set up outsourcing centres, research has found.

A study by Pierre Audoin Consultants (PAC) found the 50 biggest technology firms, including IBM, Accenture and Logica, set up a total of 49 outsourced service centres worldwide in 2008. The location with the largest single number of those - 11 - was India.

Nick Mayes, senior consultant at PAC and author of the research, said it still offers an increasingly well-educated and cheap labour force for HR, accounting and procurement. The country was more popular than China, Latin America and the US.

"The sheer quality and scale of what India has to offer means it has been in vogue for the past 10 years and I can't see any other country taking its throne in the near future," he explained.

But the study found IT companies were moving away from the traditional Indian sourcing hotspots of Mumbai and Bangalore because the labour market has "overheated" and driven up costs. Instead, Mayes said, the firms have chosen locations in Chennai, Noida and Pune in a bid to recruit and retain the best staff at competitive prices.

He added that IT firms were also looking to spread the risk of supply chain disruptions, such as last year's terrorist attacks in Mumbai, and source a range of services from different countries. He said Mexico was becoming an increasingly popular location for IT services, while Panama and Costa Rica have good call centre suppliers.

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