After years of success, the outsourcing industry is under stress as the market shrinks and spending falls. Indian companies say their business models, built on cheap labor, are under threat from a shift to cloud computing, where clients ditch server rooms and bespoke software. Here’s how the outsourcing industry has shrunk in the past several years.
$120.4 billion
The value of outsourcing deals worldwide in 2014, down from $206.8 billion in 2010.
1,144
The number of outsourcing deals signed globally in 2014. The deals are down 61% from 1,805 deals in 2010, KPMG data shows.
$552 million
The average value of the world’s 100 largest outsourcing deals in 2012. Since then, the average size has fallen and was at $452 million in 2014, according to International Data Corp.
9
The number of outsourcing deals made in 2014 worth $1 billion or more, the lowest in more than a decade. Big outsourcing deals are rarer, and are being won by fewer companies – five of those deals were made by International Business Machines Corp., according to International Data Corp.
20%-30%
The amount Indian outsourcing contract values fall when they are renewed, according to Emkay Research. As the work gets scarcer, clients bargain harder on prices.
$21,307
The average annual salary of a software developer in India, according to job search website Naukrihub.com. That’s in contrast to the $93,350 average annual salary of a developer in the U.S., according to the Bureau of Labor Statistics. Outsourcing companies say that clients are demanding quicker results and fewer, more experienced staff, forcing Indian outsourcers to hire more in the U.S. and Europe. As a result, Nasscom estimates that only 200,000-220,000 outsourcing jobs will be added in India in 2015 compared with 273,000 new jobs in 2011.
More than 50%
Amount revenue growth at India’s outsourcing giants has fallen since 2008. Tata Consultancy Services said sales grew 15% for the financial year that ended in March, compared with the financial year ending March 2008 when sales grew 37%. Infosys said revenue rose 6% last financial year, down from 19% growth in 2008.
via The Seven Signs of India’s Outsourcing Apocalypse – The Numbers – WSJ.
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