Report: Outsourcing King May Lose Crown

Surprise! India’s reign as the world’s “Outsourcing King” may be slipping, even with its rock-bottom call center costs. A new report from market research firm Gartner, Inc. warns that a labor crunch and rising wages could erode as much as 45 percent of India’s market share by 2007.

All this talk of India being the “Outsourcing King” can be a bit misleading. It may be true when taking a global perspective, but for U.S. companies, India isn’t king. As Adrian and I point out in this report, America’s most common outsourcing destination is … America. The vast majority of outsourcing done by U.S. companies (or governments for that matter) stays within our borders. When U.S. companies look to other nation’s, Canada is the top destination (Table 8), then the U.K, then Japan. India is 8th, tied with Australia (where are all those panicky cover stories about job-stealing Aussies?). Back to the Garner report:

[The] report cautions that a host of emerging countries such as the Philippines, Malaysia, Vietnam and Eastern European nations including Hungary and Poland, are also starting to challenge India’s leadership in offshore business process outsourcing (BPO.) … India can’t afford to rest on its laurels, said Sujay Chohan, one of the authors of the Gartner report and vice president and research director of offshore business process outsourcing with Gartner in New Delhi. Unless India devises a long-term roadmap to improve infrastructure and consistently grow its skilled labor force, he said India will see some of its offshore BPO clients shift business elsewhere. “Although India’s infrastructure is improving, it is not keeping pace with the rapid growth of the industry,” the report said.

That sounds familiar. Article here.