“During the pandemic, there was a lot of demand for offshoring. Since India remains an attractive offshore location, it will not be unusual to see much demand getting diverted to India, this time too,” Gartner senior director analyst DD Mishra said, adding that whenever there is a financial crisis globally, offshoring is used to optimise costs.
And India, being the world’s IT powerhouse, stands to gain.
Outsourcing means hiring an external company or team of developers to work on a software solution, especially when the vendor has a known level of expertise in executing such projects.
While Indian IT majors built their entire models around offshoring the outsourced work to cost-effective delivery locations like their home country, the share of offshore revenues and business often fluctuates with global geopolitical concerns.
Top IT CEOs concur that the current global uncertainty spells opportunity.
Executives are of the view that demand will rise through the current fiscal year as enterprises will double down on value realisation with their existing providers with a higher margin for offshoring contracts.
Numbers too suggest an upward trend toward offshore. For instance, Infosys has increased its share of onshore revenue mix from 72.4% in FY20, which was before the pandemic hit, to 76% in FY22 before it dipped slightly to 75.4% in FY23.
Similarly, Wipro’s share increased from 47.1% in FY20 to 59.1% in FY23.
Infosys CFO Nilanjan Roy pointed out that offshoring and utilisation improvements will be the top metrics to improve margins in the ongoing fiscal.
“Onsite offshore mix, post-Covid, slightly went askew because, of course, there was some travel which went back. That now strategically can be looked at as we can offshore more work,” he said during the company’s Q4 earnings call on April 13
Similarly, HCLTech CEO C Vijayakumar said that as customers continue to look for more cost optimisation, they are opening up to more outsourced roles.
“Customers are also looking at how they can reduce their operating expenses, which means more efficiency, bringing more automation and trying for more offshoring. So customers are adopting these multiple strategies,” said Vijayakumar.
Read More at https://economictimes.indiatimes.com/tech/information-tech/a-global-crisis-drives-opportunities-for-indian-it-industry/articleshow/100731790.cms