CIOIN

More than 70 percent of offshore clients from North America and Europe expect 2011 to be a challenging year, according to a report by Indian research firm Offshoring Insights. This is further illustrated by the fact that 60 percent of the respondents have decreased their budgets from 2011.

“ The IT services markets will see a definitive shift from back-end services to more client-facing services such as mobility, BI, collaboration and cloud computing, “ said Sudin Apte, principal analyst and CEO, Offshore Insights.

 Infrastructure projects wills see the most amount of cuts while focus will shift to smaller-budget strategic projects. While the report didn’t conclude that the offshore services market is heading towards a double –dip recession, it said ‘coming two-three years pose a serious economic challenge.’

 The top causes of concern for clients are geo-political risks, terrorism, scarcity of natural resources, environmental change and natural disasters.

 Apte observed that the decreasing budgets indicate that projects will become smaller in size. “We see a lot of clients doing projects as small as $150,000 to $200,000.” He also pointed out the decision making power for projects like mobility and BI no longer rests just with IT. IT funds just half the budget of such projects.

 Apte also observes a huge hype in the market for mobility-based services. As much as 83 percent of clients expect mobility to increase worker productivity and 74 percent expect it to help improve customer satisfaction. 65 percent expect mobility solution to improve sales revenue and 57 percent expect it to create competitive differentiation.

 The report suggests that smaller IT services providers offering high degree of specialized services in growing trends like mobility, BI, and cloud stand to gain the most.

 Apte believes that Indian IT service providers will need to align their innovation pitch according to the client aspiration. “Indian outsourcers still associate innovation with the ability to cut costs. However their clients expect innovation to help them growth new revenue streams and create competitive advantage.

But what looks particularly worrying is that the report suggests that the overall satisfaction from Indian service providers in gradually decreasing.

 “However the figures are still slightly better than what e saw in 2008,” reassures Apte.

 The firm surveyed 300 offshore clients across North America and Europe from a wide range of vertical like (BFSI, Manufacturing, High-tech, Telecom, Retail, CPG, Energy and Utilities, Pharma/Healthcare, Business Services.

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