India to remain a major outsourcing destination: Mckinsey

Mckinsey & Co presented its papers on 'Looking beyond the current economic slowdown' on the first day of IT.COM, which is being held at

Bangalore between Nov 1 & 5, 2001.

India will see lot of opportunities coming from new markets opening up across the globe, outside the US. Inspite of the growing competition from China and other countries, India would still remain a major outsourcing destination globally. The need for Indian companies to focus more on developing solutions and products for the domestic market will increase.

The US economy is expected to boost up. But, it is likely that the growth rates may not scale upto the rates that the country witnessed during 1972 to 1995. The average industry growths which was higher than 30% was driven by the fundamental growth in labor and productivity, which was in turn related to other factors. Though Mckinsey is optimistic that the economy will move up the line, the growth rates are expected to still remain lesser than that during the 1995-2000.

The Challenges faced by Indian market are great, such as too many players in the same service is going to be a major factor which industry will face tomorrow. It becomes mandatory that companies look at new growth models to achieve success in the future. Playing the same game is a very difficult game.

There is a great need to be productive and to develop low cost solutions for verticals like healthcare and other segments which did not invest

during the 90's.

The Indian IT industry will have to tighten up its belt and come to face the reality and challenges that are thrown open by the recession. There is a great need to increase business development momentum, increased

participation and involvement with key customers and emphasize on marketing and brand building efforts.

According to the industry observers, there is a need for a change in the business strategy and operating models of Indian companies. McKinsey

presented four models that could help the industry to sustain during the recession and lead them towards growth in the near future.

Adopting the globalized contact manufacturing strategy, being a sliver system integrator, look at partnering with product development companies and focus on offering innovative technology services.

Though adopting any of these models could help business to thrive, industry observers feel companies should look at a mix and match of these models and work in synergy to address the market.

To achieve success in the global market, companies should focus on branding to distinguish them among global players. 


Companies should focus on offering solutions which will guarantee and help its customers a faster return on investment. Build a strong relationship and customer royalty with its existing customers.