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India's Outsourcing Industry Faces Competition  - 2004-09-05


India could lose its dominance in the sphere of business outsourcing as other countries emerge as popular destinations for lower-skilled jobs. A host of Western companies have moved thousands of jobs to India in recent years.

With thousands of workers providing services for overseas companies such as payroll processing and help desk operations, many business people call India the world's "back office".

But Sujoy Chohan with the consulting firm Gartner India said several countries have emerged as tough competitors in the past year. "India will not have any single, dominant competitor," said the analyst, "but it will have competition from maybe another 20, 25 other English-speaking countries."

The countries that are winning "back office" contracts from global companies include the Philippines, Malaysia and South Africa. Those countries also have English-speaking workers available for relatively low wages.

Gartner estimates that India controls 80 percent of the overseas outsourcing at present, but that market share could be halved by 2007. However, India will continue to see business expand from the current level of $3.6 billion as job outsourcing is expected to increase phenomenally.

In recent months, several Indian companies have begun expanding overseas to tap new markets and meet the challenge of increasing competition.

India's leading information technology company, Infosys, has established a center in the Czech Republic, while another company, Mphasis, has established a base in Mexico.

This strategy aims to widen their customer bases to include non-English speaking countries. It is also aimed at finding skilled workers overseas, as Indian companies face high staff turnover at home. Mr. Chohan said overseas locations will help Indian companies stay ahead. "If you have a presence across multiple destinations," he said, "[it] gives you an edge over the competition."

Industry experts say India will remain dominant in providing high-end services such as software writing, which requires the technical skills of India's tens of thousands of engineering graduates.

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