India Still No. 1 Outsourcing Haven

About 80 percent of the Fortune 500 companies outsourced at least one operation to India in 2004, according to a trade group.
Stephen TaubJune 3, 2005

Even as more and more countries ramp up as prime outsourcing posts, the current total value of outsourcing to India is estimated at $17.2 billion, or 44 percent of the worldwide total, according to a report from India’s National Association of Software and Service Companies (Nasscom).

About 80 percent of the Fortune 500 companies outsourced at least one operation to India in 2004, compared with 60 percent in 2003, added the report. These companies either have their own centers in India or outsource to Indian technology companies, according to the Associated Press, which cited Nasscom chairman S. Ramadorai.

“While our traditional services are growing, multinational companies are also working out ways to outsource newer processes that were not outsourced before,” Ramadorai reportedly stated. He added that he expects India’s market share to expand to 51 percent by March 2008, according to the wire service.

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The four largest Indian outsourcing companies do business with a total of more than 660 clients that each spend at least $1 million on outsourcing, compared with 441 in the 2003-to-2004 period, according to the report.

The AP observed that the hourly rate for software development ranges between $18 and $26 in India compared with $55 to $65 per hour in the United States and Europe. The wire service added that as of the end of March, India’s outsourcing industry employed 1.05 million programmers and other skilled workers. The industry also provided indirect employment to 2.5 million people in support services such as transport and catering, the wire service pointed out.

India’s biggest competitor? Canada, with a 32 percent market share, followed by China (4.9 percent) and Eastern European countries (4.5 percent), reported the AP.