'Global recovery sees increased offshore activities in India'

The global outsourcing and offshoring industry continued to show signs of business recovery leading to increased momentum in the Indian offshore industry during Q3 2009, according to "Market Vista: Q3 2009" report by Everest Group, a global consulting and research firm. Everest's quarterly study on global outsourcing and offshoring activity reports that the new captive set ups increased to an 18-month high in Q3 2009 compared to Q2 2009.

Comparing Q3 to Q2 in 2009, the global demand for offshore services continued its momentum on the back of improving business sentiments:
* Key verticals such as banking, financial services, insurance (BFSI) services and manufacturing, distribution, retail (MDR) contributed towards 36% of deal signing and retained their dominant share in total transactions.
* The market activity also increased for some emerging verticals such as healthcare where the transaction volumes doubled compared to last quarter.
* North America also showed some signs of recovery with doubling of transactions in the BFSI vertical from the region.
* Twenty-eight new captives were established in Q3—an 18-month high.
* Offshore activity increased with 36 new supplier delivery centres established in Q3 compared to 30 during Q2.
* Although there was a marginal decline of 10% in the reported global transaction volumes (BPO volumes decreasing by 14% and ITO activity reducing by 8%), there were signs of improvement in key geographies and verticals.
The Indian offshore services industry witnessed growth amidst the signs of revival in demand:
* Eleven new captive centres were set up in India during this quarter, highest in any single geography. These included names such as Standard Chartered, Ingersoll Rand and Kontron.
* One-fourth of new supplier delivery centers were established in India.
* India-centric suppliers witnessed increased transactions activity in Q3 compared to Q2.
* The cost arbitrage opportunity for Indian cities improved with depreciation of the currency and reduction in operating costs. At the current momentum, the arbitrage is sustainable for about 20 years in both ITO and BPO services.
"The Indian offshore industry is growing on the back of improving demand and continued advantages of the country as an offshore destination. India-centric suppliers are investing in delivery capabilities and setting up new centres," said Gaurav Gupta, principal and country head-India, Everest Group.
"The increase in the number of captive set ups reflect signs of recovery in the overall market. We expect the industry in India to continue this momentum in the last quarter of 2009 as well as in 2010," said Amneet Singh, vice-president-Global Sourcing, Everest Group.
Everest Group is a global consulting and research firm that comprehensively serves the outsourcing and offshoring market. An industry leader since creating the sourcing consultancy practice in 1991, Everest has earned a worldwide reputation for ongoing innovation by helping clients capture optimum value through sourcing strategies and implementation.