Rising costs and risk will limit outsourcing to India, research reveals

Data security lapses in Indian call centres, combined with the ‘brain drain’ that is currently being talked about regarding Indian graduates, are set to negatively influence UK companies’ decisions to outsource to India, research has revealed.

A survey of 250 delegates by the National Outsourcing Association (NOA) at its annual summit found 60% agreed that the ‘Indian brain drain’ will push up costs and ultimately affect decisions to offshore jobs there.

More than one-third said allegations of data security lapses in Indian call centres would prevent UK financial firms from considering offshoring to India in the short and medium term.

Other key findings include:

  • 76% of respondents cited China as the destination that is most likely to challenge India’s dominance over the next five years, largely due to cost and capacity

  • 52% said the knowledge transfer that occurs when client organisations outsource an internal process is likely to put the client at risk, unless best practice procedures are followed

  • When an outsourcing project is put out to re-tender, 60% felt the best outcome for the client is to re-select the supplier it is currently working with.

Martyn Hart, chairman of the NOA, said: “This research reflects the fact that there is a whole host of new supplier locations that many end users are starting to consider.

“Cost-cutting remains a driving factor behind many outsourcing deals, but it is significant to note that while at one time it may have been the only reason to outsource, the knowledge that surrounds the outsourcing industry is far greater now, and people understand that they need to look further than just cost.”

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