UK companies turn to India for help

India will play an increasing role in IT departments' plans, as the lure of offshore development becomes more attractive.

Financial services provider Friends Provident is the latest company to turn to the sub-continent. It has signed a deal with Wipro Technologies, which will allow the company to increase development work by 25 per cent, at half the cost of using UK resources.

David Cooke, IT development manager at Friends Provident, explained that the incentive to contract out to Indian developers was to add to its resources, not replace existing staff. The company will add 40 employees to its developer base, allowing it to handle more projects.

Indian outsourcing will increase because of the deep reductions in cost, according to Simon Denison-Smith, chairman of the offshore group at supplier trade body the Computer Software and Services Association (CSSA).

He believes that many UK firms will follow the example of services company Xansa and form Indian alliances to counter competition from offshore outsourcers.

The CSSA said that the market has doubled in size each year for the last 10 years. Denison-Smith pointed out that there has been scepticism from some, but that the increasing number of deals will have a domino effect with other companies opting for offshore development.

"There's still a huge hurdle to cross. Some people are scared of outsourcing thousands of miles away. But this hurdle will come down as more people do it," he said.

Other companies that have adopted offshore outsourcing include Channel 4, British Airways and Thomas Cook.