The Economic Crisis - and an Opportunity

Filed in archive Opinions & Insights on October 2, 2008

Photo courtesy of iStockphoto, Nataliya Kostenyukova

This week, ZDNet published an article entitled "India's Outsourcing Bubble is Bursting" - describing the slowdown as it effects the IT Outsourcing labor market in Bangalore. While it doesn't appear that Bangalore is in the full throes of doom-and-gloom, the article points to key indicators of a slowdown - falls in housing prices, stabilizing salaries, and many more people looking for work.

The article points out, however, that the slowdown may have some positive effects on the outsourcing business - particularly a reduction in turnover. Furthermore, some are seeing an opening to better compete with the Accentures, IBMs and HPs of the world - not a far-fetched possibility as customers already accustomed to outsourcing get aggressive in looking for better deals.

The real key to competing with these companies is not in the back office, but the management infrastructure. Accenture, IBM and HP are expert at managing relationships, and companies have been thus far been willing to pay for that expertise. This is where the Indian and Philippine outsourcing companies have, frankly, fallen short.

Offshore vendors may want to look at this time as a time to invest in their US presences, rather than scaling back. True, it may be a zero- or negative- sum game, but the opportunity may be there to grab a far larger piece of the pie.