AS03: Tough times bring outsourcing - and India - to the fore

Services companies and those involved in outsourcing and offshoring are behind some of this year's key Agenda Setters, as Andy McCue finds out...

Outsourcing and IT services was conspicuous by its absence from last year's Agenda Setters poll. Save for Sam Palmisano at IBM and, to a lesser extent, Carly Fiorina at the helm of the then newly-merged Hewlett-Packard and Compaq, Serge Kampf (30), chairman of Cap Gemini Ernst & Young, was the only representative from the services field in the top 50.

But it's still hard times out there for most CIOs and IT directors and as the bite on IT budgets continues outsourcing, and it's associated cost-savings, has emerged as one of the few bright spots in the technology sector. Ironically, Kampf has crashed out of the chart completely this year, perhaps reflecting the difficult year CGEY has had but there are a number of significant brand new entries from the services field picked by our expert panel.

The rise and rise of low-cost offshore IT services, dominated by India, sees Indian Prime Minister Atal Bihari Vajpayee (8) break straight into the top 10. Vajpayee, with generous tax concessions and a vast pool of highly-skilled IT workers, has helped guide the subcontinent from a niche position as a location for cheap offshore application development, to the first choice low-cost offshore location for a wide range of IT services, including the burgeoning business process outsourcing market. With increasing competition from places like South Africa and China and continued pressure on price, the next year is likely to be vital for India.

Richard Allan, IT spokesman for the Liberal Democrats and panellist, said that while the price of Indian IT services is key, cost is not necessarily the determining factor, a fact backed up by Richard Sykes, chairman of sourcing consultancy Morgan Chambers, who vouched for the "strong emphasis on quality" in India.

Indian offshore services is just one way the IT services market is changing and there is a widespread acceptance that the so-called 'mega-deal' - so long the preserve and staple revenue generator of the big players such as IBM, led by Sam Palmisano (7), and EDS - is on its last legs.

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