Diversification Strategies See the Emergence of Alternative Offshore and Nearshore Delivery Locations, says IDC
December 21, 2009 Ė According to IDC's Global Delivery Index 2009, economic pressures, the increased focus on risk mitigation leading to offshore diversification strategies and the intense pressure on infrastructure have enabled Chinese locations such as Shanghai and Beijing to steal some of the limelight away from the likes of Bangalore and Delhi as global delivery locations.
The strong drive for diversification brought on by recent events such as the terrorist attacks in Mumbai and Jakarta and the H1N1 outbreak across the region, have forced organizations to focus more on topics such as operational risk management and business continuity.
There has been a strong demand from organizations for vendors to offer such diversification strategies to minimize location-centric business risks. As a result vendors offering outsourced services are drawing out business continuity and disaster recovery plans, including building out extra capacity, diversifying talent pool to be located across several regions and even organizing project delivery to be handled as a piecemeal approach to meet these market demands.
Emerging locations are building such plans into their offerings and are well set to compete for the share of pie that will move out of India, in particular.
"With economic recovery in the horizon, cities that are investing in the long-term, 3-5 year time line, be it ICT, infrastructure, education systems, language skills will enable services differentiation and build up specific or even niche skill sets along with a compelling cost arbitrage solutions are bound to be more successful in the long term," said Suchitra Narayan, Research Manager for IDCís Asia/Pacific IT Services Research.
"Tier one cities in India are coming to terms with rapid growth for infrastructure and increasing costs of living and labor. Pure low cost modeling without a longer term view on developing high value services, will result in diseconomies of scale and cities falling behind competition in terms of their attractiveness as global delivery centers."
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