IT Outsourcing Market Trends in 2007 by NeoIT

NeoIT, a consulting company focusing on services globalization, outsourcing and various offshoring topics, shared their insights on the competition on the outsourcing market. India clearly is the undisputed leader, but two other countries are getting more and more attractive, growing their shares on the ITO and BPO markets.

Russia is pretending to be the ITO (IT Outsourcing) location choice for 2007. Using its natural strengths - highly educated workforce and relatively low wages, Russia is differentiated as a primary location for development of high-end software systems and engineered products. Russian IT Export is growing rapidly, demonstrating CAGR of almost 30% in the last 5 years. This makes the country the number 3 in terms of the IT Outsourcing market in volume, just after India and China in 2006. Moreover, NeoIT predicts an even greater growth in 2007.

"2007 will see Russia emerging as a strong contender in the IT outsourcing market. It currently is the third largest IT outsourcing market behind India and China.
We expect Russian IT offshoring industry to grow at 40-50 per cent in 2007"

Equipped with such a strongly differentiated initial positioning (compared to India and China primarily the resources cost factor), Russia could become a major competitor to India in 2007. Moreover - key outsourcing centers in Russia enjoying their natural 'nearshoring' strengths, when it comes to deals with Western Europe.

In the BPO field, especially in voice-based services, India is pushed by Philippines thanks to the country’s excellent English language skills. Even Indian companies start opening up in the Philippines, to catch up in the resources availability and to provide their customers with a non-Indian outsourcing option.

Along with the clear maturation of services delivery among the nearshore and offshore providers, it is becoming easier for services buyers to seek out the proper deal setting for their outsourcing needs, the report concludes.