The Indian outsourcing market is expected to suffer as a result of recent security lapses and skilled Indian employees moving abroad, according to research by the National Outsourcing Association (NOA).

Sixty per cent of respondents questioned at the NOA Summit in November agreed that the ‘Indian brain drain’ – where Indian graduates leave the country - will push up offshoring costs and affect UK companies’ decision to offshore to the country.

Over a third of respondents believe allegations of data security lapses in Indian call centres will prohibit UK financial institutions from considering offshoring to India in the short and medium term.

Martyn Hart, NOA chairman, said: ‘The concern is that the brightest and the best Indian workers will move.

'Many have been sent overseas to learn about the cultures of the countries that are outsourcing to India so they can act as a link when they return, but they don’t want to return,' he said.

Hart says security lapses can arise when short-cuts are taken on security checks to fill vacated positions when staff are enticed elsewhere with the promise of higher wages.

‘Long-term, it is best for companies to have a business process that does not allow for high-value information to appear on someone’s desk top,’ he said.

The NOA research also reveals that 49 per cent of respondents chose cost as the reason to outsource to a country other than India, while only 14 per cent focus on the calibre of the workforce.

However, Hart says previous surveys have revealed that 80 per cent of end users decide on cost and that other factors are becoming critical in making outsourcing decisions.

‘Companies can’t keep cutting costs by 30-40 per cent, so they are beginning to look at service and how quickly the help desk answers a query and fixes a problem,' he said.

‘Multi-shoring seems to be the latest buzzword. There is no evidence yet of a complicated total solution, but outsourcing or offshoring is becoming more complicated and companies are having to breakdown what should be outsourced and where as there is evidence of a link between cultural affinity and effectiveness.’
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