February 15, 2010 2:00 am

Asia to reverse IT outsource trend

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Spending on information technology 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.

Jim Champy, chairman of Dell Services' consulting practice, says IT outsourcing is set to rise in Asia as the region's companies begin to modernise business processes and technology systems in a build-out that could last decades.

"We see, as most providers do, the Asian markets growing faster - clearly more than Europe, and certainly faster than the US," Mr Champy told the Financial Times.

"What it would feel like to me is two to three times faster, percentage-wise."

His comments come as the IT and business process outsourcing industry, which handles everything from computer systems and software to billing and customer records, is seeking a new direction following the economic crisis.

At India's principal IT conference last week, organised by the industry body Nasscom, a report by KPMG and the Asian-Oceanian Computing Industry Organisation predicted a sharp rise in Asia's share of the world's IT services spend. 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 now.

This increase represents a reversal of the trend, whereby Indian IT companies have sent executives to developed markets to try to poach business from established western outsourcing consultancies, such as IBM and Accenture.

The Indian outsourcing industry has thrived as a result. During the past two decades, it has grown into a multibillion-dollar industry that Nasscom expects to generate exports of $56bn by March next year.

However, now that international outsourcing groups have woken to the potential of India's rapidly developing economy, the battleground for winning outsourcing business has moved back to the emerging markets.

IBM provides IT services for the Indian mobile operator Bharti Airtel, under one of the biggest outsourcing contracts drawn up in the country's history.

Mr Champy said Dell Services plans to focus initially on healthcare in India. Dell Services, formed from last year's merger of US-based Dell and Perot Systems, has 20,000 staff in India, many working at centres serving international markets. But Mr Champy said the group was planning to start hiring again, to capture more domestic market share.

Dell computers were already in 100 hospitals in India, creating an opportunity to begin offering ITrelated services such as computerising and maintaining patient records.

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