Posted by: kenwbudd | March 9, 2009

Indian outsourcing fears being burned

Indian outsourcing firms are turning down business out of fear of their customer companies going bankrupt and leaving them holding a bad debt.

As a result of the current economy and the rush to reduce costs, there is an upturn in companies sending work offshore to places like India. So you would think Indian offshore companies would be happy about the potential new business opportunities and be very aggressive about going after them. Unfortunately, that is not the case and the Indian companies are very aware of the fragility of the world economy. They do not wish to be the one’s left holding the cheque.

Only a few Indian offshore companies are chasing these new deals because of this, according to Partha Iyengar, vice president and regional research director at Gartner India. In a Reuters story published March 3, Iyengar went on to say that “Indian firms need to focus on revamping their sales models to help generate cost savings and add value to the client’s operations,” but not everyone agrees with this reason for not chasing potential new business.

In a follow-up comment to the story, one Indian commentator brought up the concern that clients could go bankrupt by the time payment is expected, a very plausible and valid point. Although offshore outsourcing does provide some cost savings to client businesses, it doesn’t guarantee they’ll come out of the recession in one piece.

The Indians have proved themselves to be excellent and well respected business people over the centuries. Therefore, it seems like a sensible and justifiably cautious approach by the Indian outsourcing companies that they do put themselves in a vulnerable position that may get them dragged down with someone else’s sinking ship.

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