Outsourcing a focus in US-India dialogue

A steep hike in US work visa fee for IT professionals and Ohio state ban on outsourcing is expected to figure prominently at a key India-US trade dialogue here ahead of president Barack Obama's India visit, reports The Economic Times.

While both India and the US do not wish to muddy the waters before the visit, India is expected to record its disappointment over recent 'protectionist' trends in the US at the Trade Policy Forum co-chaired by India's commerce and industry minister Anand Sharma and US trade representative Ron Kirk.

The bilateral trade between the countries stood at $36.5 billion in 2009/10. The US also accounts for about 60% of India's total $50 billion IT and IT enabled services exports.

Cloud computing is set for a bright future and will turn traditional outsourcing "upside down", but the latter is not likely to disappear for "many years yet", according to an industry analyst, writes ZDNet.

Gartner has predicted that by 2012, utility and cloud-based services will account for at least 50% of all new demand for managed IT infrastructure services. Rolf Jester, said Gartner analyst and Asia-Pacific vice-president for IT services explains: "The keyword is new demand... a major IT user [such as] a bank or government department is not going to throw out the outsourcing contract that it already has. Neither is it going to throw out its in-house systems."

That said, Jester noted that the cloud or utility model will turn outsourcing "upside down" because unlike in the traditional model, where an outsourcer visits the customer IT environment to understand the infrastructure and negotiates the functions to manage, the cloud service provider lays out its capabilities and services from which the client has the option to pick and determine how much to buy.

While India and China are still the top destinations for outsourcing, a survey by the IT services firm Capgemini finds that Latin America is gaining ground, states IT Business Edge.

The survey of 300 Fortune 1 000 executives, conducted by Harris Interactive on behalf of Capgemini, found that 25% of the executives said they already outsource operations to Latin America, compared with 27% who cited China and 60% who cited India.

Of the 222 executives who said their companies outsource operations, the top four attributes sought are skilled labour, labour cost, technology and infrastructure capabilities and economic stability. The least relevant are proximity to the US and time zone alignment.