NEW DELHI: Offshoring of jobs to India will begin to decline starting 2014, and will reach the end of its lifecycle in eight years, according to US-based strategic advisory and research firm The Hackett Group released at the Nasscom Global In-House Centers ( GIC) Conclave being held here.
According to The Hackett Group, the traditional model of US and European companies moving finance, IT, and other business services jobs offshore will reach the end of its lifecycle over the next 8-10 years, and US and European companies will simply run out of jobs which can be moved offshore to locations like India.
The Hackett Group’s offshoring research, examined 4,700 companies with annual revenue over $1 billion and headquartered in the US and Europe. It found that by 2016, a total of 2.3 million jobs in finance, IT, procurement and HR will have moved offshore.
The Hackett Group’s Director Martijn Geerling said: “After the offshoring spike driven by the Great Recession of 2009, the well is clearly beginning to dry up. It’s critical for India to develop alternative sources of demand, to maintain growth of their business services industries.”
India is by far the most popular destination, with nearly 40% of the jobs being offshored headed there. Hackett predicted that India’s overall share will decline to 38% in 2013.
According to Nasscom, captive offshoring units of large banks, insurance companies and retailers contribute $14 billion to India’s $100-billion IT-BPO industry. According to The Hackett Group, only about 4.5 million of the 8.2 million business services jobs located in North America and Europe at the start of 2002 will still exist in 2016.
“By 2016, the number of potentially offshorable jobs will have been reduced to one million,” said Michael Janssen, principal and chief research officer at The Hackett Group.
KPMG disagreed with the Hackett’s research. “India currently has about 6% of world’s outsourcing potential. Even if we manage to double it by 2014, there will be enough headroom for more growth,” said Pradeep Udhas, Partner and Head ITBPO sector at KPMG. A partner at AT Kearney also echoed a similar sentiment.