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More IT projects likely to come India

Views 3 Views    Comments 0 Comments    Share Share    Posted 10-12-2008  
11 Dec 2008:

BANGALORE: At a time when customers in the US are battling with economic recession, they will send more information technology projects to India,
in order to bring down their costs of operations
, according to a study done by Offshoring Research Network (ORN), in alliance with Duke University
and research firm PricewaterhouseCoopers.

"Enhancing efficiencies has become more urgent in recent months as pressure on margins forces companies to increase productivity while spending less," said Arie Lewin, professor of strategy and international business at the Duke University.

Almost forty of the 100 companies interviewed as part of the survey said that they plan to put pressure on service providers for more favorable contract terms in order to trim costs. “Many companies are asking vendors to bear the upfront costs of a contract, and are even seeking longer project implementation periods,” Mr Lewin added.

Experts such as Hari Rajagopalachari, executive director of PricewaterhouseCoopers said the cost of acquiring new business will go up as customers demand more investments from the vendors.

Meanwhile, the study also found that captive operations of American companies will increasingly get involved with doing niche projects apart from managing third party relationships on behalf of their parent organisations in India.

"Captives will get more involved with costs, and will move away from doing work, which can be outsourced to third party vendors," said Mr Rajagopalachari.

While efficiency enhancement and cost reduction are among companies’ top priorities, 12 percent of respondents noted they are considering spinning off their captive operations to a provider or have already done so.

Such an option would require significant time and effort to negotiate and capital resources for financing acquisitions are likely to be scarce, the PwC study added.

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