SME Times News Bureau | 20 Nov, 2019
With global geopolitical risks rising, the Indian
outsourcing industry may benefit due to its stability, said a new report on
Fears of geopolitical instability may impact the global offshore services
market, as sourcing, procurement and vendor management executives review their
options to mitigate risk, according to Gartner.
"The Indian outsourcing companies can benefit from these risks but are
likely to do so via delivering services from smaller scale near shore countries
such as Philippines and Vietnam as well as some Eastern European and Latin
American offshore countries," Jim Longwood, Research Vice President at
Gartner, told IANS.
Indian outsourcing firms generated more than $45 billion in global services in
The offshore outsourcing market has been relatively stable in recent years,
with organizations using a mix of onshore, nearshore and offshore resources
with relatively stable demand and supply patterns.
However, recent events like the Sri Lankan terrorist attacks, the U.S.-China
trade dispute and political tensions in Hong Kong are raising fears of delivery
"Political and economic stability is an important factor in offshore
outsourcing arrangements," said Longwood.
Gartner estimates that China exports around $10 billion of IT application and
business process services, primarily to North America, Western Europe,
Asia/Pacific and Japan.
"How the trade talks progress may hinder China's ability to deliver IT
services," Longwood added.
Concerns include potential disruption to or cessation of services, increased
tax added to export labor rates and reduced quality of service due to
'patriotic' backlashes by local staff.
"However, instability is not limited to the US/China situation. All
organizations should review their offshoring and nearshoring
arrangements," he said.
Gartner predicts that by 2023, 65 per cent of larger enterprises using captive
offshore or nearshore service delivery centers will have adopted a
multi-country sourcing strategy for these services.
The report recommended that organizations should build a roadmap to split risks
across multiple countries and/or onshore low-cost centers, including automation
of service delivery.