Software Licensing & Master Service Agreements : Chicago Software Licensing Lawyer & Attorney : Sam Conforti Law Firm : Master Service Agreements, Negotiations, Outsourcing : Cook County, Illinois

Paul McDougall reports for Informationweek in their Global CIO Blog that the National Association of Software and Services Companies (“NASSCOM”) predicts the $58.8 billion in India’s outsourcing revenue for the fiscal year ending 2009 will grow to over $225 billion in the next decade. McDougall quote’s Som Mittal, the president of NASSCOM, an association that promotes Indian offshoring, in his article entitled Indian Outsourcing To Increase Fivefold:

“ … the potential for this industry is tremendous and the industry will not be demand constrained”

In order to achieve savings and to stay competitive in the global marketplace, more and more companies are outsourcing their business and technical functions. McDougall confirms in his article that the Obama campaign rhetoric of keeping the existing jobs in the US and preventing jobs from going overseas has not materialized. For further discussion on the Obama campaign rhetoric and the actual affects on outsourcing, see also the following postings in this Blog:

·         No Slowdown in Offshoring for the Foreseeable Future; posted April 20, 2009

·         Obama’s Tax On Outsourcing; posted June 1, 2009

The current trend has tech, financial services, and manufacturing as the core industries making up the bulk of the $58.8 billion in outsourcing revenue. However Mittal suggests that WIPRO, Infosys, and Tata, India’s outsourcing behemoths, foresee healthcare and transportation as the engines for further revenue growth.

With the coming growth an emphasis on infrastructure moves to the forefront. The traditional centers of Hyderabad and Delhi will need to be supplemented by the so-called second-tier centers like Kolkata in West Bengal in order to accommodate the growth.

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Orla O’Sullivan reports for Network Computing in an article entitled, Obama Not Impeding Offshoring, TATA Says, that the campaign pledge to slow the flow of work to cheaper labor markets, either by directly employing people abroad or by engaging third-party service providers based outside of the U.S. has not occurred and in fact may be on the upswing. O’Sullivan discussed this matter with one of India’s leading providers of offshoring services, TATA Consultancy Services.

A large portion of TATA’s services are to the financial services industry, and this segment is growing with actual IT Operations taking place as banks and other financial services firms send more and more work offshore. O’Sullivan further reports that back in October of 2008 TATA purchased Citigroup Global Services Limited, Citi’s Indian offshoring services unit providing business process outsourcing. TATA’s next step is to sell its’ banking software products in the US.

As Raymond Strecker, global consulting practice head for TATA North America, describes this current spurt of growth:

“Our infrastructure business is growing the fastest. That is, inside the glass house, or data center: remote server administration, server repair, network monitoring, and various infrastructure services.”

It appears that as banks find the need to cut costs in this current global economic slowdown, that more regulations will just force these institutions to become more creative. If a bank or financial services firm finds it uncomfortable to have operations offshore, there doesn’t seem to be any prohibition from employing onshore service providers who do have operations offshore and thus indirectly reaping the benefits of cost savings.

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