A recent study conducted on the global software offshoring industry by Sand Hill and Persistent Systems found that India continues to be the top destination for offshore activities in software and BPO. Nearly 85% of the respondents surveyed said that they are sending work to India. This is in spite of the facts that there has been a 15% increase annually on costs and China throwing up a greater challenge.

Stiff competition is eating into the profit of several US and European companies. Most of the companies now see India as a safe offshore destination to face the stiff challenges at home. English language capability continues to be the main advantage point for India over offshore rivals like China, Philippines, Taiwan, Sri Lanka, Vietnam and other Southeast Asian countries. The management and product level experience that India has been able to garner during the initial years of offshore experiment is proving very handy when competing with its immediate rivals.

The offshoring in the software field is still limited to non-core functions like support and testing. The encouraging factor is that many companies are now showing confidence in India and are sending high risk strategic works. But the BPO sector has moved ahead fast and does all the normal works that a company handles in the Untied States.

The high quality of work that Indian software and BPO companies are maintaining is doing a world of good in increasing the business volume. In the beginning, Indian software companies were a bit lagging in the maintenance part but this was soon rectified. The willingness to acquire new skills and workforce flexibility are other chief reasons for the continued Indian success in offshore software domain.

The political class that has been ruling India for the past two decades, irrespective of their ideologies and vote bank politics, has been supporting the information technology and BPO arena. The high level visits that have been taking place have strengthened the relationship with United States and several European countries and has given a new dimension to bilateral business.

This does not mean that India’s place as top offshore destination is not without problems. There are several hot issues like lack of proper communication, lack of infrastructure, increasing cost, lack of training, and unwillingness to adapt to the changing demands. These problems need immediate solutions. Small time offshorers need more exposure as they are finding it hard to gain the confidence of companies.