IT Services Vendors Go Beyond Indian Hot-Spots for Sourcing Hubs

IT services suppliers will continue to build out their low-cost sourcing networks across multiple regions in 2009 in order to improve their cost base amid challenging market conditions.

London – January 7, 2009 – India was the most popular global sourcing location for the world’s largest IT services suppliers in 2008, but vendors are now looking beyond the country’s two former hotspots of Bangalore and Mumbai for new sites.

According to research from PAC, the 50 largest IT services companies worldwide opened a total of 49 new offshore or nearshore delivery centres for IT and BPO services last year (compared to 35 in 2007), with India accounting for a total of eleven of that number.

None of the new Indian sites were in the country’s two major IT skills hubs of Bangalore and Mumbai, with Chennai, Noida, Hyderabad and Pune emerging as the most popular locations for suppliers including Accenture, IBM, Logica and Wipro. This week, TCS announced a new site in Bhubaneswar in Eastern India, and plans to open further centres in Pune, Nagpur, Gandhinagar, Kochi, and Chandigarh.

But while India remains the number one global sourcing location, another key trend is for large services companies to spread their sourcing locations across multiple countries. Ten new centres were opened in Latin America, and a further six in China last year, and as the local suppliers in these countries mature, international vendors are increasingly looking to expand through acquisition rather than setting up their own centres from scratch. In the last month, CSC purchased a Bulgarian company, while ACS moved for an Argentine contact centre services firm.

The top 50 vendors also opened four new sourcing centres in the US in areas outside major metropolitan areas, such as North and South Carolina. This is a trend that may be further encouraged in 2009 by the election of President Obama, who is keen for the technology sector to be one of the drivers behind domestic employment.

Nick Mayes, Senior Consultant at PAC, said: “Current cost pressures may see some plans for new sourcing centres put on hold in the immediate short term. But IT services vendors will continue to ramp up their use of multiple, low-cost sourcing centres in 2009 – particularly in areas such as infrastructure management and BPO – in order to remain price competitive and protect their profit margins.”

About Pierre Audoin Consultants (PAC):

PAC is a global market research and strategic consulting firm for the Software and IT Services Industry (SITSI). PAC helps IT vendors, CIOs, consultancies and investment firms by delivering analysis and advice to address a range of growth, technology, financial and operational issues.

Our 30+-year heritage in Europe – combined with our US presence and worldwide resources – forms the foundation of our ability to deliver in-depth knowledge of local IT markets, anywhere. We employ structured methodologies – undertaking thousands of annual face-to-face interviews on both the buy and sell side of the market, as well as a bottom-up, top-down approach – to leverage our research effectively.

PAC publishes a wide range of off-the-shelf and customized market reports –including our best-selling SITSI® program – in addition to our suite of strategic consulting and market planning services. Over 160 professionals in 16 offices –across all continents – are delivering the insight that can make a difference to your business.

For more information on our company, please visit our website at

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Source: PAC

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