16 june 2011
However, despite the projected growth, Mittal admits that India's traditional IT outsourcing model is experiencing a fundamental shift.
"We've now moved to an outcome-based model" - being paid on performance, rather than one based solely on the number of people deployed on any one job," he says.
"That is giving outsourcers an incentive to be more efficient." HCL Technologies director Bindi Bhullar reinforced what Mittal said.
Bhullar said, "One interesting trend is that buyers are becoming more sophisticated in their purchasing of IT services, looking for more outcome based pricing models.
"As a result, the frequency with which executives approve major consulting deals casually during a round of golf is diminishing. Instead, several developing trends are shaping client expectations for the client-consultant relationship. These trends include more centralised purchasing, better information sharing among clients and higher skilled IT workers."
Meanwhile, analysts warned that above-average wage rises that the IT outsourcing industry in India is witnessing could become a concern in future. According to research firm Gartner principal analyst Arup Roy wages have risen about 15% a year.
Roy said while India still remains a low-cost destination, that advantage is "depleting with every passing year". "The problem is that investors have got used to growth of 20-25 per cent. Investors will have to reset their expectations."
IT outsourcing shifting to outcome-based model: Nasscom
Bangalore: India's IT industry body Nasscom chief Som Mittal has said that after the economic crisis, traditional IT outsourcing model in India is undergoing a fundamental shift to an outcome-based model.
Mittal said that India's IT outsourcing companies are expected to deliver double-digit growth by the end of the year. He is forecasting that revenues from the sector will rise at least 15% to about $70bn this year as customers in the US and Europe resume spending after the global economic downturn.However, despite the projected growth, Mittal admits that India's traditional IT outsourcing model is experiencing a fundamental shift.
"We've now moved to an outcome-based model" - being paid on performance, rather than one based solely on the number of people deployed on any one job," he says.
"That is giving outsourcers an incentive to be more efficient." HCL Technologies director Bindi Bhullar reinforced what Mittal said.
Bhullar said, "One interesting trend is that buyers are becoming more sophisticated in their purchasing of IT services, looking for more outcome based pricing models.
"As a result, the frequency with which executives approve major consulting deals casually during a round of golf is diminishing. Instead, several developing trends are shaping client expectations for the client-consultant relationship. These trends include more centralised purchasing, better information sharing among clients and higher skilled IT workers."
Meanwhile, analysts warned that above-average wage rises that the IT outsourcing industry in India is witnessing could become a concern in future. According to research firm Gartner principal analyst Arup Roy wages have risen about 15% a year.
Roy said while India still remains a low-cost destination, that advantage is "depleting with every passing year". "The problem is that investors have got used to growth of 20-25 per cent. Investors will have to reset their expectations."
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