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September 28, 2012

IT services providers are exploring alternative offshore locations: Gartner

50 more countries are considering establishment of offshore location

By CBR Staff Writer

India’s dominance as an offshore location as at stake as IT services providers are looking for alternative destinations as possible offshore or nearshore locations, according to Gartner.

According to Gartner, in a bid to meet the requirements of multinational businesses, the IT services providers are investing in delivery centres in alternative locations around the world.

Further 50 countries, in addition to the existing 30 locations worldwide, are considering establishment of an environment that attract firms planning investments in lower-cost countries.

Gartner research vice president Ian Marriott said business opportunities are growing in emerging markets, and this is causing organisations to reassess their global delivery choices.

"They are reconfiguring their sourcing strategies to support a broader geographic footprint as new locations emerge for offshore services," Marriott said.

Gartner also revealed that about 63% of IT service purchasers use Latin American locations, 55% use locations in EMEA and 63% locations use Asia/Pacific locations.

"Providers are beginning to de-focus further investments in India and will aim to create critical mass across a number of these centers," Marriott said.

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"This will allow them to establish a global delivery network through a combination of common methodologies, tools, processes and procedures, to provide seamless and consistent delivery capabilities to their customers, wherever they are located."

Simultaneously, with the rise globalisation of business and business opportunities, the sourcing and operational leaders must consider changes to operate in different locations and support for the opted changes.

"Despite the widespread use of offshore services, many organizations still struggle to make critical provider choices, and focus on cost as the dominant factor in globally delivered services," Marriott said.

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