Monday 26 March 2012

The Economic Crisis and India’s IT, Software Consulting Growth

Looming economic crisis and continuous recession disillusioned many customers looking for affordable yet reliable services related to IT and software consulting. Numerous business customers left their former service providers in search of a reliable service that is better adapted to meet the challenges of ongoing economic troubles on a global scale, creating gainful opportunities for entrepreneurial-minded IT and software consulting based in developing markets.

Thus, a number of countries in Asia/Pacific region emerged as serious contenders in the race for consumers of IT and software consulting services worldwide, setting foot in new markets, and replacing established market players. The map of the IT consultants that are considered reliable and are in high demand among business customers changed dramatically in the past decade or so. Of course, each country and region has its own leading players in the local market; nevertheless, a global shift toward IT and software consulting services based in India is more than evident, with India boasting some 50 percent of the global market for offshore software consultancy.

Such a development was not unexpected, really, yet it did not happen overnight. It took years to educate a generation of highly skilled professionals in the field of IT, while it took even longer to overcome prejudices related to the reliability of local consultants and the quality of their service. Well-established Western corporations are slow when the matter in question is to choose a new service provider or IT consultant, but when the economic crisis hit Europe and North America cash stripped enterprises were fast to realize they should adjust their budgets to a new reality.

In fact, India’s software consultants have been ready to face the challenge, with numerous IT consultancies already providing services to a broad customer base in Europe and the United States, competing on equal terms with IT advisories based in Canada, Latin America, and Eastern Europe. Moreover, the country is now having trouble to fill the gap in the demand for outsourced services and the number of IT professionals its educational institutions are able to produce within a short period.

Naturally, North American and European governments are experiencing growing pressure from local business communities to adopt measures restricting the outflow of IT related jobs abroad, including IT consulting, software development, . On the other hand, regulatory measures are destined to be unsuccessful in a market environment where corporations compete in a liberal market in which fundamentals like productivity, efficiency, costs, etc., matter. Those are largely populist measures intended to preserve local jobs but they rarely succeed in doing so for good reasons: labor costs in the West are very high, productivity is not among the world’s highest, social benefits of workers burden corporate budgets, to name a few.

Thus, India’s software consultants are the big winners amidst an ongoing, and heated, debate whether outsourcing of services, mainly in the field of IT, is good or bad for Western economies. Demand for such services is growing rapidly worldwide, Western consultants, however, are not able to supply affordable service to an increasing number of mid-sized corporations on a tight budget.

Therefore, the whole debate is heading in a wrong direction, blaming corporations for looking eastward for affordable and reliable IT services, while not realizing that underlying issues of productivity and payroll costs undermine the very competitiveness of the West. In any case, India’s IT and software consulting sector is now in position to gain even greater share of the world market for software consulting services.

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