Indian IT services firms won almost a quarter of the 100 biggest global outsourcing deals in the world in 2014, as they continue to eat into the market share of western giants.
According to IDC, new technologies and business models, combined with offshore delivery, help Indian suppliers take large deals from suppliers that are more established selling to large global enterprises.
The firm said India-based outsourcing firms won 23% of the total contract value of the top 100 worldwide outsourcing deals in 2014, compared with 8% in 2013 and 7% in 2012.
"India-based outsourcers are making significant inroads into the global top 100 outsourcing deals," said IDC outsourcing and offshore services vice-president David Tapper.
"The combination of effectively leveraging the offshore business model; incorporating new methods of service delivery such as hosting and cloud; investing in more transformative capabilities in areas such as analytics, social media, and mobility; and enhancing strategic local capabilities and resources has enabled the India-based outsourcers to effectively compete with well-established competitors in the outsourcing industry for the largest of large-scale outsourcing deals," he added.
Read more about the evolution of Indian IT services firms
- IT services firm Cognizant has reported a sales increase of almost 22% in its latest three-month business period, as its move to non-linear growth accelerates
- Indian IT services firms need to reshape their businesses if they are to continue to grow at the rates experienced over the last decade, as traditional markets and service offerings reach maturity
- Indian IT services giant Infosys is using IPsoft technology to automate the IT and business process services it provides to its global customer base
Indian suppliers built their businesses and reputations offering low-cost services by harnessing a highly skilled IT workforce in India, where wages are much lower. This created linear business models – typically, they win more business, then add more staff to support it. But Indian service providers are now trying to reach the holy grail of non-linear growth.
This model is based on adding business without needing to add to the workforce to support it, reducing the proportional increase in the cost of providing an additional service. To do this, firms are moving to a hybrid model where they use modern technology and their business domain expertise to offer higher value services on top of lower cost skills.
IDC also revealed that average deal sizes were down in 2014 compared with 2013, and there were fewer deals worth more than $1bn.
Director at sourcing consultancy Burnt-Oak Partners, Robert Morgan, said the huge leap in share that the Indians have achieved is partly the result of businesses holding back on large outsourcing projects that would normally go to the likes of HP, IBM and CSC.
“A lot of businesses have put off their plans for very large outsourcing projects,” he said.
But Indian companies are growing, added Morgan, and the increased onshore presence in developed economies is helping them: “Indian suppliers are more confident and are being more adventurous.”
He also said it would not be a surprise if an Indian supplier makes a large acquisition of a large US or European IT services firm.