Vinay Jha’s Blog

April 30, 2009

Knowledge process outsourcing set for take-off

Filed under: Outsourcing — vinayj @ 11:21 am

Courtesy: http://www.vnunet.com/

Knowledge process outsourcing (KPO) could finally be stepping out of the shadow of business process outsourcing (BPO), as firms look to reduce costs and improve service efficiencies, according to new research from Datamonitor.

The analyst firm’s Trends in Knowledge Process Outsourcing report attempts to define the market and outline its growth opportunities.
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"KPO is an area that was talked about a lot, but not always well defined. Five or six years ago it was extremely hyped, but in 2006 more BPO vendors got interested and it grew in maturity," said Datamonitor analyst and report author Ed Thomas.

"We are defining it as the movement of core business processes requiring a high level of domain expertise out to third parties."

KPO is becoming a popular choice for traditional BPO and outsourcing providers, because it offers access to the core of a client’s business and makes the supplier indispensable, according to Thomas.

"It is a cliché of outsourcing in general that partnerships are important between [customer and outsourcer], but in KPO it is key because of the nature of the data being handed over," he said.

"The providers need to go out of their way to demonstrate the resilience of their processes."

Companies are also likely to see the key benefits of KPO as cost reduction and greater efficiency, according to Thomas.

"They are able to go into areas you are not able to and target your business, and show you the areas of the market you need to focus on and design a strategy for," he said.

However, although the market is maturing, as evidenced by some of the large BPO providers now beginning to target KPO offerings at the mid-market as well as the more traditional global enterprises, Thomas warned that it remains a fairly immature area.

There are still a large number of fairly small, boutique KPO providers, in what is quite a fragmented market, he explained.

April 29, 2009

Bharti weighs outsourcing wireline network to Alcatel

Filed under: Outsourcing — vinayj @ 12:35 pm

Courtesy: http://www.livemint.com/

The country’s largest mobile phone company by subscribers, Bharti Airtel Ltd may soon finalize a multi-million dollar deal with France’s Alcatel-Lucent to outsource the management of its national wireline network.

The deal, which is expected to cover at least 2.7 million wireline and broadband customers, is likely to see the Paris-headquartered Alcatel-Lucent, which describes itself on its website as specializing in providing solutions to deliver voice, data and video communication services to end-users, manage the entire network on Bharti’s behalf.

Akhil Gupta, deputy chief executive officer and managing director of Bharti Enterprises Ltd, the parent company of Bharti Airtel, said: “I cannot comment on whether there is a specific decision. At this point of time, there is no firm plan to do so. The details can be only given when something finally emerges.”

Gupta, however, said that Bharti “does look at such activities to decide whether it is best to manage networks in-house or outsource them.”

People familiar with the matter said that Bharti Airtel has taken an in-principle decision to this effect. These people added that an announcement in this regard is imminent.

The deal may also involve around 4,000 Bharti Airtel employees being transferred to a new joint venture between the two companies, they said, requesting anonymity.

Gupta said the benefits of outsourcing network management “include better quality and costing, as well as enhanced economies of scale”.

Bharti Airtel has already outsourced its information technology operations to International Business Machines Corp. and its wireless network, which supports around 97 million users, to Ericsson and Nokia Siemens Networks.

Legal Process Outsourcing: New Threat Or New Opportunity

Filed under: Outsourcing — vinayj @ 10:41 am

Courtesy: http://www.thecompletelawyer.com/

This is a difficult time to give career advice to lawyers. Lateral hiring has slowed dramatically, bonuses have been reduced, layoffs are occurring at many large firms and scores of associates and partners are finding themselves with too much time on their hands. While 2008 was a challenging year for many law firms, 2009 is not looking any better (at least not yet). In the near future, bankruptcy and litigation practices will pick up steam. Regulatory practices are likely to be given a boost once the Obama administration gets in gear. We all hope that by the second half of the year the credit markets will loosen and M&A and financing practices will begin to recover.

The good news is that it is only a matter of time before the demand for legal services regains its footing. But as the practice of law comes back to life, a new threat lurks around the corner: legal process outsourcing (LPO).

Legal Process Outsourcing Involves Sending Legal Work Overseas

LPO, simply put, involves sending legal work off shore to a lower cost jurisdiction. Right now, India seems to be the principal beneficiary of this practice though there are LPOs doing work in Israel, South Africa and the Philippines. Although law firms have grown accustomed to sending large document review projects to outside vendors or hiring temp agencies who can supply contract lawyers, the vendors who provide these services have mainly been domestic.

Using an LPO, some very large corporations have been saving a bundle on large document review projects. Rather than paying associates at American law firms well in excess of $100 per hour, the early adopters of LPO, which have included Microsoft, DuPont, Philips and GE, have turned to India’s large pool of highly educated law school graduates who have studied common law and have a strong command of the English language.

While the majority of LPO work is “low value” (e.g. large document review projects), some LPOs are beginning to do more “high value” work including drafting contracts and patent applications.

Law firms have been much slower to adopt the practice of outsourcing to LPO firms, but given the potential for cost savings (roughly 50% by some estimates), corporate counsel will eventually begin demanding it for certain projects.

Although many law firms are still not eager to publicize the practice, at least one national firm in Boston has been using an LPO for three years to do first drafts of briefs. When the Managing Partner of the office presents the idea to her corporate clients, they are very supportive. Using an LPO, in her opinion, has been a terrific way to generate a high quality and less expensive work product.

The Benefits Of LPO Are Not Only Financial

Proponents of LPO have suggested that outsourcing legal work to a different time zone brings other benefits as well. Indian lawyers, for example, work while lawyers in the US are sleeping, which reduces turnaround time. In addition, LPO provides a quick and ready supply of labor for large projects. Law firms and corporate law departments can have the resources they need without having to keep large numbers of associates on the payroll.

As Abhi Shah, CEO of ClutchGroup, an LPO which operates in both the US and in India, explains:

LPO promotes substantial time savings for document review, regulatory compliance, legal research and other legal projects. Rather than attorneys working long hours at high rates in the US, LPO is a coordinated global effort. The US law firm can focus on case strategy and other specialized legal issues during the day. Then the project moves to India at night for research and document review, which in turn is delivered to the US by the next morning. The legal team is working together literally around the clock and around the globe.

LPO is not a fly-by-night trend that is likely to go away. According to articles in the Wall Street Journal and the National Law Journal, the practice is growing rapidly in India. Right now, it is estimated that LPOs generate about $250 million in annual revenues. The number is small compared to technology outsourcing which is already up to $40 billion. But Forrester Research projects that the industry will generate $4 billion in revenue by 2015.

Criticism Of LPO Is Widespread

As you might imagine, there are many critics of LPO. To get an idea of their thoughts, read the Wall Street Journal’s lively legal blog. Some people are concerned about the wide range in the quality of the work, the need to maintain confidentiality and data security (heightened by recent terror attacks in Mumbai), the struggle to get good customer support from call centers based in India, the fact that there is no recourse if an Indian lawyer violates an ethical rule, and that it may be difficult to avoid conflicts of interest when vendors may be serving clients with opposing interests; others are outraged that this amounts to the unauthorized practice of law.

After speaking to a number of professionals who are involved in LPO and after attending several conferences where LPO was on the agenda, I am convinced that much of the criticism is unwarranted. Lawyers in the US may naturally feel threatened by the competition posed by LPO. But lawyers trained at Indian law schools are well equipped to handle due diligence projects and document review in litigation. With proper training, they can also handle more complex drafting projects. What is important is how well the outsourcing attorney supervises the work. However, this is true whether the work is being done by an associate at the law firm, a contract attorney hired to work at the firm, a lawyer or paralegal working for an outside vendor in some other US city or a team working in India.

As for data security, the technology sector has already established good protocols for preventing sensitive data from walking out the door in India. LPO firms need only follow what has already worked in the software industry. In fact, one provider pointed out to me that the standards for data security in India are actually much greater than they are at some companies in the US.

Another important factor which suggests that the naysayers have it wrong is that the ABA issued an ethics opinion this past summer condoning the practice:

US lawyers are free to outsource legal work, including to lawyers or non-lawyers outside the country, if they adhere to ethics rules requiring competence, supervision, protection of confidential information, reasonable fees and not assisting unauthorized practice of law.

LPO Has Career Implications

Law is an inherently conservative business. So far, because LPO is being used in large measure by corporations rather than by law firms, it represents only a small fraction of the legal work done in the United States. Over time, though, law firms will be encouraged by their corporate clients to adopt LPO as an effective means of controlling runaway legal fees and more corporations will turn to LPO firms for some of their legal needs.

While the current economic crisis may accelerate the pace at which companies and law firms adopt LPO, we are a long way off from sending all of our legal jobs overseas. In fact, much legal work will never be off-shored because it is not efficient. LPO works best when the work itself involves some element of repetition. If that is missing, then all the efficiencies of outsourcing are lost by the added costs of supervision and training. For other projects, however, law firms will find it increasingly difficult to deploy a high priced army of associates to do work that can be done much more cost effectively overseas.

Law partners can appreciate the benefits being offered. LPO provides smaller law firms, in particular, with access to a large talent pool. By using LPO for certain projects, these firms can quickly staff up for larger matters without having to increase head count. Law firms of all sizes will still need associates. But associates will be spending more of their time on higher value work that is not easily delegated to a cheaper vendor.

The legal community will resist LPO. No profession sits back quietly when an outside threat emerges. But as one commenter on the WSJ blog stated:

Unfortunately there are just no guarantees any more in qualifying as a lawyer as a route to success and financial stability. Trying to stop this is as futile as King Canute trying to hold back the tide. One piece of advice is to drop the racism and hysteria and assess where your skills lie and what you can do to contribute to a thriving successful global economy.

Russell Franks, the CEO and co-founder of IPEngine, a Boston based LPO which is focused on outsourcing patent prosecution and related IP work, put it this way:

LPO should be viewed as adding a new layer to the traditional pyramid. This shouldn’t concern lawyers who can figure out how to manage these resources to provide their clients with a high quality and cost effective service. These lawyers have always been the best kind anyway, they just have a new arrow in their quiver. The folks who should be worried are those that end up charging clients too much for the quality of service provided because they do not know how to do this. The issue is that perhaps that profile fits a lot of lawyers who have not been used to clients demanding control over the budget.

Lawyers at all levels of practice should take note of this trend and look for ways to provide valuable services to clients. Be nimble: do not expect today’s cash cow to be alive tomorrow. Outsource what makes sense, and serve your clients well.

April 28, 2009

Data center outsourcing grows in popularity among midsized firms

Filed under: Outsourcing — vinayj @ 11:53 am

Courtesy: http://searchcio-midmarket.techtarget.com/

The vexing question that periodically intrudes on a midmarket CIO’s agenda — Do I build a new data center or let somebody else take over my diamond-studded ball and chain? — has been brought into sharp relief by the economic recession. With capital scarce and unrelenting pressure to cut costs, data center outsourcing is looking like an increasingly attractive option, market watchers say.

"We are seeing more interest in outsourcing among midsized companies than before and in the $500 million to $1 billion revenue range, a lot  more interest," said Rich Matlus, a vice president of research at Stamford, Conn.-based Gartner Inc.

The trend corresponds with other periods of economic decline, when data center outsourcing has increased from about 5% to 7% of Gartner clientele to as high as 10%. But this time, Matlus said, another factor enters the equation: the age of existing data centers relative to current technologies.

"Many were built in the 1970s and 1980s, and they are not the most energy efficient and cannot handle the current processors," he said. "CIOs are left with [the choices of] building a brand new data center, leasing space off somebody else who has a newer facility [or] outsourcing the entire data center."

Indeed, the brainteaser of how to plan and manage a physical facility that depreciates over 25 years for an industry that has seen dramatic change in the past 10 years is making outsourcing in all its permutations — managed, hosted, remote support, colo, the whole shebang — look good to many CIOs, said Andreas M. Antonopoulos, an analyst at The Nemertes Research Group Inc.

Building a data center, especially to Tier 3 or even rarer Tier 4 specifications, is expensive and difficult. Depending on the level of redundancy, costs can range from $2,000 per square foot to tens of thousands of dollars per square foot. Because of the capital investment, the facility has to last a long time to squeeze out the value. And consider the potential for error: A data center built in 1991 to last until 2015 would have required modifications for the Internet in the mid-1990s; in 2000, for blade servers; and in 2005, for what is now called cloud computing.

"I liken it to rocket science," said Antonopoulos, senior vice president and founding partner of Mokena, Ill.-based Nemertes. "It is possible, but only if you have rocket scientists. Failures are few and far between but when they do occur, they tend to be fiery explosions — spectacular in ways you wouldn’t want," such as pricey new data centers that suffer outages or don’t anticipate new developments.

Data center metrics that matter: Cost-effective and efficient

But a data center strategy should not be shaped by just external forces, said Gartner’s Matlus. And that would include the conversation the CEO had last weekend on the golf course with a buddy touting the benefits of data center outsourcing.

"I always warn a client who comes to me about outsourcing to make sure they are doing this for the right reasons," Matlus said.

That list of reasons starts with a sourcing strategy that takes into account what is going on in one’s industry, what kind of initiatives the business has planned and how well one’s current data center strategy can meet those demands, in terms of resources, skills and capital expense.

"If they can do all that, and do it cost-effectively and do it well and are a quality shop, it may not behoove them to outsource the data center," he said, even for companies where the data center is a commodity service rather than a strategic advantage.

Outsourcers run cost-efficient and effective shops, but after they add in their profit, marketing and sales costs, their prices are about average, meaning some shops won’t save a lot of money by outsourcing, Matlus said. "So if you have a shop that is running on below-average costs and at high quality, it does not make sense to outsource."

However, a low-cost, fully depreciated data center that is not performing to users’ satisfaction must be fixed, and outsourcing the whole thing may be a viable option, given capital constraints, Matlus said. Or for a shop that is highly efficient and very high cost, outsourcing could save money.

Comparison shopping: Know thyself first

When a company goes to an outsourcer, it does not have the option of telling the provider how to perform the work but rather what metrics it must perform against. So firms like Gartner and Nemertes typically counsel companies that the service-level agreements (SLAs) for uptime and availability from an outside provider should meet and exceed the SLAs for the business — and be enforceable. The contract should lay out objectives of work, delineating which roles IT will maintain and which will be performed by the outsourcer, and so on.

The problem with making that cost and performance calculation — or negotiating an effective contract — is IT shops often don’t have a good grasp of how long it takes even their own people to perform certain tasks, and so can’t make a fair comparison, said Bill Peldzus, vice president, data center and BC/DR at Glasshouse Technologies Inc., a Framingham, Mass.-based consulting firm. Many IT shops don’t even know what’s in their current service-level agreements.

"They have no idea, on something as interesting as, ‘I need 100 more gigabytes of storage and how long will it take to get that,’" Peldzus said.

And it is not just the small shops without the sophisticated business metrics to measure cost and efficiency that are in the dark. "Let’s just say I have seen customers on the Fortune 10 list that do not know how long it takes to provision storage," Peldzus said.

Gartner’s Matlus agreed, telling the story of a recent Fortune 100 client whose data center performed at a high level but was also a money pit, so it was considering outsourcing. A benchmark study uncovered that though the data center employed tape robotics to automate storage, it had kept all its tape hangers, basically obliterating the cost savings reaped from automating.

Mainframes, brain drain, baby boomers, Linux, virtualization

In the next few weeks, SearchCIO-Midmarket.com will explore why and how midmarket CIOs are outsourcing all or parts of their data center, and will talk with CIOs who are equally passionate about keeping the data center under tight internal control.

Meantime, industry experts say there are plenty of reasons other than a cash-strapped economy driving midmarket companies to look outside their four walls for data center support. Companies that are having trouble finding people to support their mainframes have been calling Gartner for advice, Matlus said. Young people weaned on Linux, Unix and Wintel don’t want to learn mainframe systems, and as the economy has worsened and companies have been forced to lay off employees, people 45 and older have been disproportionately hit, exacerbating the shortage of mainframe support.

Conversely, companies trying something new — like Linux or virtualization — that don’t have the internal skills are going for outside help, rather than hiring. In addition, virtualization is both extending the life of internal data centers and paving the way for outsourcing to another provider, as companies get used to virtual computing environments.

And companies with a single location are looking into obtaining redundancy by moving the data center off-site, whereas companies with multiple locations can realize economies by moving to an off-site data center, assuming they have sufficient bandwidth.

Yet many stop short of utility or cloud computing for their core systems, as security remains a concern, even for early midmarket embracers.

The CIO of a fast-growing online services business has unloaded his corporate email to the Microsoft cloud, for instance, and is looking to put financial systems in the cloud. And additional cloud storage on the cheap for nonsensitive data would be great. But anything with customer information? "At this point security is so paramount to our customers, I wouldn’t entrust that to anyone else," he said.

How to Locate an Appropriate Outsourcing Firm – Pros and Cons of Outsourcing – Benefits of Outsourcing

Filed under: Outsourcing — vinayj @ 10:42 am

Courtesy: http://www.clickforhowto.com/

Outsourcing has become a popular trend among all business houses irrespective of the size, scale or nature of business. Internet has brought about a revolution by way of outsourcing. Entrepreneurs can collaborate with any number of outsourcing agencies or firms and enjoy the benefits of economies of scale.

Outsourcing can be done within the geographical boundaries of a nation or international lands without much of a hassle.

Some useful instructions to be followed before proceeding for outsourcing are given below:

Step 1– Set aside your reasons and grounds favoring outsourcing. Will it help reduce costs and increase profits? Determine the processes which are time consuming and involve huge costs. Weigh the pros and cons in terms of quality and quantity standards, deadlines.

Step 2 – Locate a competent outsource firm that can carry your work and share the responsibility in an efficient way. Talk to your business associates, search the net, go through business magazines to have a better knowledge of outsourcing enterprises having a good market reputation.

Step 3– Contact these service providers and chalk out a plan with respect to your priorities. Calculate the costs and benefits expected from outsourcing to each of these providers. Match your requirements with their credentials and select the one whose performance is closer to your set priorities.

Step 4 – Prepare a proper rental agreement or contract that entails all the necessary details to determine your savings and costs. One major set back in outsourcing is the initial high set up cost. You can consider forming a partnership with an already existing competent outsourcing firm.

Step 5 – Select that service provider  which gives you the best deal in terms of quality/quantity standards, targets, time limits at the most economical deal.

These guidelines will ensure that your business is runs smoothly without any interruptions and also keeps pouring in the profits.

April 27, 2009

Outsourcing Industry: World Bank Votes $50m

Filed under: Outsourcing — vinayj @ 11:10 am

Courtesy: http://www.thisdayonline.com/

The World Bank said it had agreed to set aside the sum of $50 million in furtherance of an initiative aimed at promoting Information  Communication Technology  (ICT) enabled services and the business process outsourcing industry  in Nigeria.

Key areas of intervention, according to the bank,  include infrastructure, connectivity, capacity building and skills development.  A statement issued by a leading partners in the project, the Senior Economist with the Africa Finance and Private Sector Development, Mr. Ismail Radwan, said key areas of intervention include infrastructure, connectivity, capacity building and skills development.  He said the World Bank is committing about $50m to fund sensitisation campaign and capacity-building workshops for the development and growth of the Nigerian ICT and the outsourcing sector.

"World Bank is planning to allocate approximately $50m towards setting the stage and formalising its plans for the development and growth of the Nigerian Information and Communication Technology (ICT)  and outsourcing sector, " he said.

As part of its contribution towards socio-economic revitalisation of Nigeria, the apex bank said it is confident that a wider application of ICT as well as the popularisation of business process outsourcing could lead to a significant transformation of the society.

The statement said that  in order to concretise the plan, a meeting of a select group of industry leaders is to be held under the theme: Developing the ICT/ITES and Outsourcing industry in Nigeria – the role of Public and Private Sector.

Issues to be discussed at the breakfast meeting scheduled for Abuja include the need for the public and private sector to forge a partnership with multilateral agencies such as the World Bank to create the right environment that will help the country to actualise some of the key aspects of its national development.

TCS aiming to double revenue from home turf

Filed under: Outsourcing, Software Development — vinayj @ 9:24 am

Courtesy: http://economictimes.indiatimes.com/

Tata Consultancy Services (TCS), the biggest software exporter of the country, said it will double its revenues from India, currently at $500 million, to $1 billion over next three to four years, as the company seeks to grow its business from the domestic market in order to cope better with lower demand in its top markets of US and Europe.

“The government spending is significant, apart from several stateowned utility companies who are seeking to transform,” said N Chandrasekaran, executive director and chief operating officer, TCS. As India’s top tech firms TCS, Infosys, Wipro and Satyam seek newer revenue opportunities outside the US market, country’s domestic IT market has become the new battleground for some of the biggest outsourcing contracts to be awarded this year by organizations such as Indian Railways, BSNL and India Post. “We are pursuing several government contracts, however, it could take longer because of the general elections,” Chandrasekaran added. Indian government organizations such as India Post, Indian Railways and other departments including LIC will spend around $2 billion on information technology this year, as the government’s share of total IT spend in India is set to cross 10% over the next two years. “We currently get over $1.1 billion from developing countries in Latin America, the Middle East, India and Asia Pacific,” he said.

Apart from two mega deals worth $100-300 million being considered by India Post and Indian Railways, there are around three smaller outsourcing contracts being considered by ONGC, LIC and SBI. While LIC is currently evaluating an outsourcing contract worth almost $70 million to be awarded in the next few months, ONGC and SBI are yet to structure their IT outsourcing contracts.

HOME COMING

TCS aims to double its revenues from India to $1 billion from $500 million over the next three to four years.

The company seeks to grow its business from the domestic market with lower demand in its top markets.

Indian govt organizations such as India Post, Indian Railways and other departments including LIC will spend around $2 billion on IT this year.

April 24, 2009

World Bank to support outsourcing with $500m

Filed under: Outsourcing — vinayj @ 9:29 am

Courtesy: http://www.punchng.com/

The World Bank plans to invest about N72.5bn ($500m) for the roll out of the infrastructure that would enable the take off and sustenance of outsourcing business from local and foreign destinations.

Our correspondent learnt that the support from the global financing body would come in tranches with an initial investment of N50m to help the country actualize some of its key national development objectives such as employment generation, poverty alleviation, wealth creation and human capacity development.

It was also learnt on Thursday that the details of the infrastructure financing in the area of Information and Communication Technology would be unfolded at a breakfast meeting holding in Abuja on Tuesday.

In order to galvanize multi-sectoral and public private participation approach to the project, a number of persons in both public and private sector organizations have been invited to the breakfast meeting.

Senior Economist, Africa Finance and Private Sector Development at the World Bank, Mr. Ismail Radwan, said the meeting would concentrate on how the public and private sectors can work with the bank to create the right enabling environment that would help the country actualize its key national development objectives.

April 22, 2009

China to train more "open source" talents with Sun Microsystems

Filed under: Software Development — vinayj @ 9:18 am

Courtesy: http://www.tmcnet.com/

China’s State Administration of Foreign Experts Affairs (SAFEA) signed an agreement here Tuesday evening with US computer service provider Sun Microsystems to jointly set up courses on "open source" technology in the country’s colleges and companies.

"The development of open source technology has brought both challenges and opportunities to China," said SAFEA deputy director Li Bing here Tuesday. "The project will help broaden the scope of the country’s higher education and bring it closer to the forefront of the global IT industry." The two sides will launch a three-year project that will include customized seminars, training courses, workshops and internship programs, which mainly focus on university supervisors, teachers and college students in IT-related majors and workers in IT companies.

Open source describes a kind of software development method that makes source code available to the public for further modification and development. Compared with closed-source technology, it usually means higher reliability, more flexibility and lower cost.

Lin Lee, vice president of the Global Communities of Sun Microsystems said the cooperation would help boost employment of Chinese college graduates in the IT industry.

Open source technology has seen rapid development in the past few months. In February, the United Kingdom encouraged its government organizations to use open source software in an attempt to reduce the cost of software development and fight against piracy.

IT market research giant Gartner predicts that by 2012, 90 percent of companies across the world will be using open-source software.

"Open source technology will help improve the country’s information safety," said Hu Dong, an official with the China International Talent Exchange Foundation which runs the project with Sun.

"It will also help break the monopoly in the software industry and boost companies’ innovative power," said Hu.

A team of Chinese university presidents will visit Sun’s headquarters and several universities in the United States to map out a detailed plan for the project.

April 21, 2009

India’s Revenue From Outsourcing Could Be $225B in 2020

Filed under: Outsourcing — vinayj @ 9:37 am

Courtesy: http://www.pcworld.com/

India’s National Association of Software and Service Companies (Nasscom) said Tuesday that the country’s outsourcing industry can potentially earn revenue of US$225 billion by 2020, of which about $175 billion will come from exports, and the balance from the domestic market.

The country’s revenue from outsourcing in the fiscal year to March 31 was about $60 billion, of which $47 billion was from exports, a Nasscom spokeswoman said.

The Nasscom figures include revenue of both Indian outsourcers and the Indian services and research and development subsidiaries of multinational companies.

Nasscom however warned that the industry faces some challenges, including competition from other countries, and poor quality of education and infrastructure in India.

Currently only a small percentage of graduates have the skills necessary to be employed directly by the outsourcing industry. Only about 26 percent of engineers, for example, can be employed for technology services.

Nasscom has teamed up with management consultancy McKinsey & Company to draw up a plan for the outsourcing industry for 2020.

More than 95 percent of India’s services exports originate from nine major cities whose infrastructure like power, road and air transport, and water supply is already constrained, according to the joint report. A recommended move to smaller cities has not gained momentum, it added.

Competition from at least 25 to 30 other low-cost countries could reduce India’s market share by 10 percent, according to the report.

In its best-case scenario, the report forecasts a potential revenue of $375 billion by 2020 for India’s outsourcing industry.

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