Eight Reasons Why Outsourcing to India Could Hurt Your Business

Though India may be the leader for offshore IT outsourcing, there are many reasons why U.S. companies should consider other options.

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Once upon a time, if you wanted to try to shave as much as 20 percent off your IT delivery costs, outsourcing to India was the only option. Now the story has changed. "Three to five years ago, there weren't a lot of viable alternatives," says Horowitz of PricewaterhouseCoopers. "Now there are a ton." Contenders for the offshore outsourcing buck are springing up in Latin America, Eastern Europe, the Caribbean, Asia and the Middle East. The bonus is that a lot of these new offshore outsourcing locations have learned from India's struggles over the last decade and addressed some of the issues like infrastructure early on, says Horowitz. "It used to be India or bust. With China maybe second," Horowitz says. "Now we do risk assessments and location analysis on a lot of geographical possibilities."

AMR's Stiffler calls it "India fatigue." It's palpable even in the global companies that continue to invest in India, Stiffler says. They're growing tired of the attrition and rising costs and other issues. And they want to diversify their offshore portfolios. Thus, the question of outsource to India or not has evolved to a more nuanced analysis. Would we be better off sending the work to Mumbai or Manila or Mexico City? Or maybe some combination of locations?

Of course, all those options come with their own complications. You could just as easily be reading an article on eight reasons not to outsource to Costa Rica or China or the Czech Republic as you are reading this one on India.

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Copyright © 2007 IDG Communications, Inc.

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