UK businesses keen to maintain IT love affair with India

The 'love affair' between UK business leaders and Indian IT service providers shows no sign of waning, nor does the popularity of India as a global sourcing destination

The Outsourcing Service Provider Performance Study 2007/08, undertaken by EquaTerra, suggests that 100 per cent of UK businesses offshoring all or part of their IT functions are using India as one of their locations, and are planning to continue with this strategy. The study also indicated a strong degree of client satisfaction with Indian companies in comparison to more traditional US or European-based service providers.

"Indian firms such as Wipro and TCS are achieving real satisfaction in providing skills, flexibility and quality of work," says Phil Morris, managing director of EquaTerra Europe. "The globalisation of services will require larger, more global suppliers such as Accenture, IBM and Hewlett-Packard to reposition their overall delivery models and structures in order to keep pace."

The study evaluates £34bn worth of UK IT sourcing contracts. This is equivalent to 75 per cent of the total current UK IT sourcing market, and covers more than 300 unique client-provider relationships and 20 service providers. It researched 110 of the top IT spending contracts in the UK, and explored their perceptions of their outsourcing providers, satisfaction with performance, and plans for future contracts. Study participants are senior level representatives (CFO, CIO or their direct report) within client companies, who outsource all or part of their IT functions and processes.

The study findings indicate that cost is still the primary driver for many of the organisations polled, but over half (54 per cent) are now outsourcing for other reasons such as availability of skills, flexibility and quality of work. Other key findings include:

  • Despite the current high profile of China as a key global sourcing destination only 5 per cent of the leading IT organisations in the UK who participated in the study are currently utilising the region for this purpose.
  • Business Process Outsourcing (BPO) is increasing but at a relatively slow pace with a 5 per cent increase on last year (26 per cent to 31 per cent).
  • Real dissatisfaction with outsourcing is rare, occurring in only 14 per cent of the contracts evaluated in this study.
  • A multi-sourcing environment, as opposed to sole sourcing, tends to lead to higher satisfaction rates.

Image: 100 per cent of UK businesses offshoring all or part of their IT functions are using India as one of their locations and plan to continue with this strategy

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