by Beth Bacheldor

Will Offshore Providers Start Providing Onshore Services?

May 06, 2010
Enterprise Applications

Indian outsourcing companies are responding to a growing sentiment that some business and IT processes should stay onshore.

I came across an interesting article authored by Rakesh Sangani of Proservartner, a consultancy in the United Kingdom that’s focused on providing clients expertise on outsourcing, offshoring, shared services and corporate services. Sangani is a strategic advisor and solution architect with the firm, and also the editor of the Shared Services and Outsourcing Network website.

So, back to Sangani’s article (which appeared here as a series in Sangani’s Keeping It Real column). In the article, Sangani identifies key trends, and his predictions, for the coming year.

What caught my eye, but not my surprise, was his first prediction:

“We therefore predict that over the next 12 months there will be an increasing demand for onshore services from clients, either due to the perception of offshore outsourcing or due to the client considering the outsourcing of more complex activities. As a result, we will see more of the current outsourcing providers purchase or develop onshore capability in the US, Japanese and European Markets to serve these clients.”

So, the offshore providers—namely the Indian IT outsourcing companies—are going to come onshore (be that here in the U.S. or in Europe or Japan) and begin marketing and selling onshore services onshore. Sangani points to several developments that back up this prediction.

First off, Infosys BPO acquired McCamish Systems for $38 million plus another $20 million based on them reaching performance targets.

Sangani seems to be on the money. Apparently there’s others speculating Infosys has its sights set on overseas expansion, particularly in Europe. In an article on VCCircle, Infosys is working on two acquisitions in the $500-million range in Europe.

Sagani’s second development backing the trend of Indian outsourcing companies extending their reach is reflected in what he calls a “quasi-joint venture” between Tata Consultancy Services (TCS) and Dow Chemical. Indeed, back in November 2009 TCS announced it was expanding its business alliance with Dow Chemical, including setting up a services facility near the site of Dow’s global headquarters in Midland, Mich. ( covered that, and the Infosys acquisition of McCamish Systems, here).

Finally, Sangani points to Indian BPO Genpact’s 10-year contract inked in January with drugstore chain Walgreens. The deal calls for Walgreens to shift its accounting processes and jobs to Genpact, but also for Genpact to use Walgreen’s Danville, Ill. center as of its (and the largest, by the way) three delivery centers.

Are there any other deals, bits of news, developments, etc. that you know of that fall in step with Sangani’s prediction? Or do you see developments that contradict it? Let me know!