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Source:  THE HINDU-Business Line

India has become the top offshore destination for European enterprises traditionally thought to be shy of sending work to the country, a recent report by Forrester Research said.

Forrester’s survey of 300 European enterprises shows that more than 60 per cent of firms intend to send their work to India. This count is more than any other obvious single country or grouping of countries — for example the CIS region or Central Europe, the report said.
Budget cuts likely

Forrester also said that European companies plan to increase their India spend substantially. Nearly 50 per cent of the firms that currently offshore or plan to offshore in the next 12 months plan to increase their spend on Indian resources. Twenty per cent of these firms plan to increase their spending by more than 10 per cent of what they spent in 2008.

However, most firms are expecting moderate budget cuts as economic pressures and cost-cutting drivers are visible in their budgeting decision. All three top European markets including UK, France and Germany would pare budgets. More than 60 per cent of UK firms are cutting their budgets, the report said. While there is talk of economic recovery, it is not yet reflected in firms allocating money for technology expenses.
Fewer first-timers

Also, very few first-time users will try offshore services, the report said. Compared to Forrester’s survey in 2008, the current research shows a drop of more than 20 per cent in the number of companies that were thinking about starting an offshore initiative for the first time, it added.

But experienced offshore clients would extend their usage further. The companies that saw offshore benefits in the past are optimistic about continuing and expanding their offshore usage, the report said. These firms report that they will either continue ramping up their offshore work or will use offshore resources wherever possible, the report added.

Overall, compared with the US, Europe still offers a lukewarm response to offshore. The majority of European companies are keeping their offshore budgets flat. Furthermore, compared to North American firms, fewer Europeans are increasing their offshore budget, and a higher percentage of companies are reducing their offshore spend, the report said.