Outsourcing grows as India spices up services market

The lure of outsourcing for heads of IT is as strong as ever reveals two recent surveys, but their choice of partners is changing.

Gartner reports that offshore spending will swell 50% in 2006 and 2007, kept afloat primarily by UK firms. Speaking at the European Outsourcing and IT Services Summit last week, the analyst said the number of businesses offshoring will increase from 13% to 20%.

Research from Datamonitor shows that India’s popularity with UK companies continues. However, it also finds that larger service suppliers are losing ground to smaller Indian companies offering more focused services.

Indian service providers experienced a combined sales growth of 35% last year and were the most profitable and hired the most staff of all the top 50 service providers. Overall, the combined revenue growth rate for these top players is £142bn for 2005.