India It Is, as UK's Favored Outsourcing Destination

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Despite a whammy of market forces driving up their costs, including an appreciating rupee, rising wages and difficulties finding enough workers, Indian outsourcing providers appear to be faring pretty well -- especially in Europe, which is experiencing rapid growth in outsourcing.


According to a recent EquaTerra report, all UK companies that offshore all or part of their IT functions send at least some of the work to India and plan to continue to do so.


The study encompasses 34 billion (U.S. $66.9 billion) worth of UK IT sourcing contracts, or about three-fourths of the current UK IT sourcing market, more than 300 outsourcing clients and 20 service providers, according to a press release posted on NDTVProfit.com.


Echoing research from other analysts about Europe's growing appetite for outsourcing, EquaTerra found that the number of UK businesses using a global sourcing strategy rose from 47 percent in 2006 to 57 percent in 2007. In addition, 54 percent of the respondents plan to increase their outsourcing activities this year, with just 9 percent saying they will outsource less.


In another sign of the growing maturity of the market, more than half of the companies surveyed are outsourcing for reasons other than cost, including added business flexibility and availability of specialized skills.


Though India is far and away the most popular outsourcing destination, the number of UK companies outsourcing to Eastern Europe grew from 17 percent in 2006 to 25 percent in 2007, according to EquaTerra. Only 5 percent of respondents send work to China.