The Indian outsourcing industry has come up a long way in the last ten years. We have seen the top software exporter TCS cross $4.00 billion in revenues. The other key players Infosys, Wipro have enjoyed similar successes. This boom has led to immense wealth creation for middle class in India which in turn has contributed to a surging stock market and a real estate market which almost looks to be in a bubble. I remember ten years ago, I could have bought a luxurious condo in Delhi for something like USD 50,000, now it is more like USD 200,000. Hiring a senior programmer, ten years ago, would have set me back by $800 a month, now the going monthly rate for the same programmer is around $2500.The Indian currency, Rupee, which was going at 48 to a dollar in 2002 is now challenging 40 to a dollar mark. No wonder the price arbitrage between India and US, which had fueled this boom, has suddenly shrunk to unimaginable levels. Heck, today it is much cheaper to buy a 3000 square feet house in Dallas, Texas than in Delhi or Mumbai!
Moral of the story- the price differential which kept this business going, is slowly coming to an end. That said, there are couple of ways the outsourcing companies can still make money and grow 1) move up the value chain 2) move offshore development centers to third tier cities in India which are still cheaper 3)develop strong in-house training facilities- recruit and train straight out of college grads, they are much cheaper 4) focus on domestic market.
Outsourcing for cost benefit is not a slam dunk any more.One needs to choose an outsourcing partner carefully, ours is going to be based in a 3rd tier city, so that we can still get our clients the benefits of cost differentials!

>The Indian outsourcing industry has come up a long way in the last ten years. We have seen the top software exporter TCS cross $4.00 billion in revenues. The other key players Infosys, Wipro have enjoyed similar successes. This boom has led to immense wealth creation for middle class in India which in turn has contributed to a surging stock market and a real estate market which almost looks to be in a bubble. I remember ten years ago, I could have bought a luxurious condo in Delhi for something like USD 50,000, now it is more like USD 200,000. Hiring a senior programmer, ten years ago, would have set me back by $800 a month, now the going monthly rate for the same programmer is around $2500.The Indian currency, Rupee, which was going at 48 to a dollar in 2002 is now challenging 40 to a dollar mark. No wonder the price arbitrage between India and US, which had fueled this boom, has suddenly shrunk to unimaginable levels. Heck, today it is much cheaper to buy a 3000 square feet house in Dallas, Texas than in Delhi or Mumbai!
Moral of the story- the price differential which kept this business going, is slowly coming to an end. That said, there are couple of ways the outsourcing companies can still make money and grow 1) move up the value chain 2) move offshore development centers to third tier cities in India which are still cheaper 3)develop strong in-house training facilities- recruit and train straight out of college grads, they are much cheaper 4) focus on domestic market.
Outsourcing for cost benefit is not a slam dunk any more.One needs to choose an outsourcing partner carefully, ours is going to be based in a 3rd tier city, so that we can still get our clients the benefits of cost differentials!