India as Liaison in Offshoring Projects

Bitpipe's Analyst Views just released an interesting summation of what analyst companies are saying about offshoring these days. Author Jim Zimmermann quotes from a Summit Strategies report that ranks the top 10 countries “based on their 'offshore location attractiveness\'”: [Note: The report doesn't claim these are necessarily reasonable choices for IT work. — Ed.]

  1. India
  2. China
  3. Malaysia
  4. Czech Republic
  5. Singapore
  6. Philippines
  7. Brazil
  8. Canada
  9. Chile
  10. Poland

He quotes a Gartner report on risks posed by security regulations in global delivery. These encompass:

  • Security risks
  • Privacy protection risks
  • Government interception risks
  • IP risks
  • Employee/labor laws
  • Contractual/legal risks

Mr. Zimmermann makes an astute observation regarding India, which, of course, dominates the offshore landscape in IT. “Expect India to evolve into a middleman between the US and European markets and the low-cost Asia-Pacific markets.” It's a bright idea — that as India itself begins to offshore the work it's attracting, it would take on this liaison role for buyers.

One last point, then I'll let the report speak for itself. Mr. Zimmermann includes stats from research firm AMR on the amount “over contract costs that businesses spend to create an operate management and audit teams to supervise outsourcing contracts”:

  • 2003 – 11%
  • 2004 – 17%
  • 2008 – 24%

This is quite a contrast to the META Group suggestion that you should expect to spend 6-10% of the contract value on management.