The Hindu Business Line : India needs to plan back-up on outsourcing: Study

INDIAN manufacturers and service providers need to set up spare capacities anticipating further sourcing of goods and services by those in developed countries, according to a study by Accenture, a consultancy.

This is based on a survey of 238 senior procurement executives across a range of industries in the US and Europe, which indicated that outsourcing from developing countries is expected to nearly double in the next two or three years. While 25 per cent of those surveyed are yet to get into outsourcing, at least half of them plan to start soon. Also, though Europe is ahead in outsourcing, the US is expected to catch up and Indian companies would do well to prepare in advance, according to Mr Sanjay Dawar, Associate Partner, Accenture.

At a presentation of the survey on Friday, Mr Dawar said that Indian companies should also work on their strengths — engineering, skills and innovation. India is seen as an alternative to China by those getting into outsourcing and those who hope to source from more than one location. When compared to China, India is competitive in handling orders of medium and small volumes.

Other than India and China, the other major destination for outsourcing would be East Europe, which has the advantage of being neighbours to their more developed counterparts in Europe. Some of the East European countries such as Poland, Hungary and the Czech Republic figured along with China and India as best performers as outsourcing destinations.

Automotive, communications and high tech, retail and consumer products and the resources industry are among the leaders in outsourcing.

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