From Offshore to Near Shore

From http://www.offshoringtimes.com/

Major Indian IT players are challenging the Western giants: EDS, Accenture and IBM Global Services for control of Europe. But can the Nearshore model help them become truly global.

Currently the top three India companies - all claim themselves as global, but these company largely earn their revenue from the US and UK market. The projects these companies undertake are mostly low-end IT skills. It appears none are competing for those mega-deals that are in the tens of millions of dollars, but are satisfied doing in hundreds of millions.

Though revenue wise Indian giants lags behind the Western player, but each has a higher market capitalisation compare to another Western major EDS. As far as TCS is concerned, it is already in the top ten and the same with Infosys too. With such astounding valuations, the pressure is on to these companies to deliver consistently and that can only be achieved in the long term by evolving into powerhouses, with the scale and geographic reach to challenge the likes of EDS and CSC for global contracts.

Offshoring has developed and is expected to grow. IDC a market research house estimates that the worldwide market for offshore IT services will grow at a rate of 20 percent every year.

Near Shoring is not a new trend; many of the major US and UK-based companies have made use of the lower-cost employees of Canada and Ireland to accomplish their IT offshoring need for many years. Looking at the kind of rapid distribution of IT services jobs to India, followed by economic growth; most countries across European Union are portraying themselves as the ideal Nearshore location.

Providing offshore services to the US and UK has always been a relatively straightforward affair. But in Continental Europe with its many languages, appears difficult to set up Near Shore unit, but adopting a common language factor has helped raise confidence in potential clients but it appears the offshore providers have not made enough attempt to tap the market. France and Germany has so far proved not friendly toward offshoring, but looking at the latest development there are indication that this is beginning to change.

Wipro Technologies feels there are huge growth opportunities in continental Europe, and they intend to hire more locals, and build more Near Shore centres to get as close to the customer as possible.

Most of the Indian offshore provider realize that clients feel more comfortable with geographically close centres to start with, So once they are settled in, and gained confidence in the company, they can eventually move the work to India.