Fresh on the heels of the news from Tata Consultancy Services, Gartner has issued a press release, announcing one of their reports that makes a contradictory assertion.

According to today’s press release, aptly titled, “Gartner Says Economic Slowdown in the US to Accelerate Offshoring of IT Services“ (sorry, I’m not a Gartner client, so I can only comment on what they chose to include in their press release)

‘STAMFORD, Conn. –(Business Wire)– The current U.S. economic slowdown will lead buyers of IT services to consider increasing the percentage of their labor in offshore, lower-cost locations, according to Gartner, Inc. India will remain the dominant location for IT offshore services for North American and European buyers as a result of its scale, quality of resources and strong presence of local and traditional service providers.

With concerns that the US economic slowdown could extend to other geographies, organizations are refocusing on IT cost reduction and taking steps to accelerate the use of offshore labour. Buyers of IT services will shift from cost containment goals to a greater focus on cost reduction and productivity increases in their sourcing decisions. This will lead to a steady increase in the adoption and expansion of offshore services - primarily from India, but increasingly from other countries as well.

“Factors that will give India the edge over other offshore locations are scale and quality of labor. North American and European buyers of IT services have been the force behind a growing offshore services market and India is central to almost any discussion of offshore services delivery for these buyers”, said T J Singh, research director, Gartner. “Whether it is the indigenous India-centric service providers that have a wide-reaching impact on the IT services sector, or a vast and growing IT labour pool being trained to support a global client base, India will continue to be the most-sophisticated country option to source offshore IT services in the near term.”‘

The rest of the release quotes several other Gartner employees discussing their contention that a more severe downturn will lead to increased interest in outsourcing.

Intuitively, this makes sense, and it’s very consistent with what I’ve been telling all of my China based clients, so I’m glad to see that Gartner is in agreement.  One thing that bothers me, however, is the lack of discussion about China.  Gartner has historically underestimated, and missed the opportunity to provide insight into China’s software/IT outsourcing industry.  The good Chinese software/IT outsourcing companies will continue to grow rapidly based on both a very strong domestic market for their services, and, along with the Indian vendors, the need for Western companies to improve efficiency.  I’ve never understood the reasons behind the Gartner outsourcing analysts’ lack of willingness to cover China.  I’ve been so disappointed by this that I’ve stopped participating in the Gartner Outsourcing events.

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