Australia overreacts to Indian outsourcing: Gartner - News - Business

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This story was printed from ZDNet Australia.
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Australia overreacts to Indian outsourcing: Gartner

By Staff writers, ZDNet Australia
July 28, 2003
URL: http://www.zdnet.com.au/news/business/soa/Australia-overreacts-to-Indian-outsourcing-Gartner/0,139023166,120276591,00.htm

The level of outrage over the outsourcing of software development to India is disproportionate to the effect it is having on the local industry, according to analysis group Gartner.

The research company claims that Indian software developers secured just AU$71.71 million of the Australian sourcing market for development and integration services, out of a total market size of AU$3.585 billion. That's just two percent.

There were five Indian companies that captured most of the Australian business outsourced to India: Tata Consulting Services, Satyam, Infosys Technologies, Pentasoft and three companies in the HCL group. These firms grew by as much as 36 percent.

"These companies can be pleased with this achievement as their competitors are all registering single-digit growth," said Gartner's Asia-Pacific Vice-President for Research, Rolf Jester. "However in the scheme of things, this is a small share of the market. Certainly, it is disproportionate to the large amount of opposition to offshore sourcing that has been expressed in Australia in the last few months."

"Opposition will eventually die away as Australian companies take advantage of the quality and cost benefits and realise there is more to be gained economically by embracing, not resisting, the global delivery model," said Jester, claiming that there was a political backlash against offshore outsourcing because it was seen to threaten the jobs of local software developers.

The top 10 players in the Australian software development and integration sector accounted for 46 percent of the market, or AU$1.649 billion. They were led by IBM GSA, which has recently announced it would establish a sourcing centre in Ballarat.