Terrorism: Impact on Outsourcing

In recent times, terror attacks have been happening all round the globe incessantly. Few years back, it was widely considered that the terror attack/terrorism is a third world phenomenon. However, with 9/11 all that has changed. Post 9/11, there has been a concerted effort from all the international leaders to act together in fighting terrorism. However, in spite of all the actions taken by the international community, terror continues to raise its head with impunity. The terror attacks in Mumbai prove that not much progress has been achieved in the fight against terrorism.

In fact, in the year 2008, there have been more than 20 confirmed terror attacks in India including the Mumbai attack. This trend has forced many people outside India to think that India is not a safe place to do business. In fact, many businesses that have been approached for outsourcing raise this concern as a reason for not utilizing outsourcing as a tool in their business strategy.

However, it is pertinent to note that these kinds of attacks have no influence on outsourcing at all. A business in say California suppose outsource its accounting to India, suppose in Bangalore. Normally, the outsourcing vendors in India use the IBackup servers for the transfer and storage of the backup files. These servers are based in California and use 128bit encryption. A person having the login credentials to his/her account can access the account from any part of the world.

So, let’s suppose that at any point in time there is an unfortunate event of terror attack in India which destroys the office premises of the outsourcing vendor, the data is still safe. All the outsourcing firms in India follow the principle of taking back ups of their work on a daily basis. In fact, businesses in US who have been outsourcing to India or who want to outsource to India should insist on daily back up of their data.

There is another angle to this debate of terrorism impacting outsourcing. The attacks of 9/11 have shown as that terror is not limited to any one part of the world. It can strike even at the most secure places. Supposing there is an unfortunate event of terror attack in US which affects the office premises of a business. In such an event, will it not be better if someone has the data secure & safe somewhere, so that the day the business is ready with the redone infrastructure, the data also is available! This is something that is possible with outsourcing. In fact, because of outsourcing, the technology has advanced to a level where data is no more needed to be converted into paper form. It is available in the virtual world! A terror attack may wipe out the physical data but it will never be able to touch the virtual data!

Besides, terror attacks are primarily done to scare people, to instill fear in the minds of people and to adversely affect the normal way of life. By stopping outsourcing just because of terror attacks would tantamount to bowing in front of the designs of the terror perpetrators. It will therefore be in the better interest of the world and the business community if outsourcing is just looked at from a strategic point of view and not link with terror attacks.

IT Outsourcing 2010

Spending on IT outsourcing will grow faster among Asian companies than their western counterparts in 2010, Dell Services estimates, reversing the trend of recent years that has seen more western groups buying services from India and China.It forecast that Asia would account for 26.3 per cent of the global consumption of IT and business-process outsourcing services in the next decade, up from nearly 20 per cent currently.This increase represents a reversal of the trend whereby Indian IT companies have sent executives to developed markets to try to steal business from established western outsourcing consultancies, such as IBM and Accenture.The market for IT outsourcing is expected to rebound a bitthis year ie,in 2010, say industry watchers. For instance, more than 75 percent of the service providers polled by EquaTerra in the third quarter of this year reported continued growth in their deal pipeline, which was up 10 percent from the previous quarter and 34 percent from the same period last year.There has been an increase in the number of contracts being renegotiated and rebid during the past 12 months, according to outsourcing consultancy Compass America, and that will continue in 2010. The number of top-tier service providers shrunk this year, creating both challenges and opportunities for other vendors in 2010.


China-based providers are not immune to the global economic slowdown, it is interesting to note that future growth rates are likely to outpace the overall offshore outsourcing market (essentially signified by India-based providers) by a significant margin.The government of China, recognizing catastrophic impact on the environment by heavy industry, has enacted favorable policies to nourish sustainable and profitable industries including software outsourcing. There are a host of government programs, tax policies, and investment options designed for high tech companies and service providers.Many have predicted that China’s outsourcing growth will outpace the average growth rate of the outsourcing industry as a whole. According to a study by IDC, Chinese cities will overtake their Indian counterparts as top destinations for offshore global delivery by 2011.

But the scale of providers in China has not reached a level required to create and maintain a valuable brand when compared with leaders such as IBM, HP, Accenture, or even India-based players Wipro and Infosys. Without strong branding, margins for China-based service providers will remain lower due to competing providers with the same level of relatively low brand recognition.iii