The Dao of Outsourcing

With the year ending, thoughts turn to next year and analysts weigh in with 2009 predictions.  I was recently searching my electronic library for historical statistics on software services revenues for India and China and discovered a Gartner Symposium ITXPO report from 2002 entitled, “Going offshore to globally source IT services”.  The report included predictions for China and India’s software services industry growth and expert analysis from six years ago.

It was interesting reading because predictions around India were accurate while predictions regarding China fell short substantially.  The discovery of this report changed the focus of this post from future predictions to a historical look at the offshore software services industry progress in the past decade.

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China daily recently reported Indian outsourcing giants are aggressively acquiring smaller Chinese outsourcing companies, including more than 40 local outsourcing companies in Shanghai.   Indian tier 1 outsourcing companies have been operating in China for years, but traditionally have built development centers rather than growing through acquisition.  There are several reasons for this significant shift in Indian outsourcing companies China market entry strategies.

Economic crisis – As sales slow or decrease in America and Europe, Indian companies need emerging markets to increase revenue.

Opportunistic acquisitions – A previous post on how the global economic downturn has affected Chinese outsourcing companies, mentioned that many smaller Chinese outsourcing companies are experiencing cash flow problems making them prime targets for acquisition.

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