Indian service providers, once considered the darlings of the outsourcing industry, today face challenges causing U.S. clients to question the benefit of sending work overseas. Also, as the value of the U.S. dollar drops in relation to the Indian rupee, some offshore providers feel compelled to raise prices, which negates the cost savings U.S. companies expect when offshoring IT work to India. And if smaller India-based offshore providers hope to compete with the IBM Global Services and Accentures of the industry, they must build global service delivery centers and expand their reach beyond their own geographic region.
"While it is less expensive than operating solely in the U.S., the cost of doing business in India has become more onerous because the demand for talent there is so high now that workers want more money and staff turnover has increased," says Mindy Blodgett, research analyst at Yankee Group. "It is also better [public relations] for a U.S. company to be able to say, 'We are outsourcing, but not offshoring.'"
