'Outsourcing trend under threat'

India needs to aggressively spruce up its competencies or it might soon witness an export of information technology jobs, according to emerging trends. This is because Indian IT labour is becoming expensive compared to Russia and China.

The leaders in offshoring "" almost all of which are global companies "" are increasingly pursuing a 'global sourcing' strategy that encapsulates a relentless pursuit of low-cost, high quality locations around the globe. This gives them the assurance that they will not be held hostage to skill shortages/ wage increases at any one location.

Rubbishing the core need for offshoring as saving costs, a survey by The Capco Institute states: "The current era of belt tightening adds even more impetus to saving costs as the overwhelming reason for offshoring, although respondents make clear that this assumes at least equivalent quality and 41 per cent list improving quality as a driver."

All this gains more significance for India as nearly 89 per cent of the global financial institutions who are offshoring their processes to India have reported satisfaction levels, while achieving cost savings of 40-50 per cent.

Furthermore, 61 per cent of participants experienced quality improvements, with 39 per cent finding quality the same.

Indian corporations must constantly upgrade these aspects so as not to lose out on the first-mover advantage, the report observed.

Arguing against the backlash outsourcing has created, the report adds: "Economic integration does cause temporary displacement of workers in certain jobs, but eventually it benefits both the 'donor' country as well as the 'receiving' country by raising living standards in both. Thus, while the displacement that took place in manufacturing is now being mirrored in service industries, we must have faith in the service sector's ability to reinvent itself."

The report goes on to state that as certain jobs migrate to offshore locations new jobs would be created.