By Andy McCue
Monday, September 26 2005 09:42 AM
URL: http://www.zdnetasia.com/news/business/0,39044229,39258780,00.htm

Offshore outsourcing has started a revolution in IT services that will see the big Indian vendors rise to the top and some of the established western players disappear, according to the head of one of India's biggest IT companies.

Speaking to silicon.com in Dublin, chief executive of Infosys Nandan Nilekani, said customers are no longer prepared to accept the "old way of doing things" when it comes to outsourcing. "This is irreversible and it is causing a churn in the market. When the dust settles there will be a new set of leaders," he said.

Nilekani pointed to the recent €1.8 billion (US$2.2 billion) ABN Amro outsourcing deal that Indian vendors Infosys, Patni Systems and Tata Consultancy Services all won significant chunks of as evidence the tide is turning in favour of the homegrown offshore providers.

He said: "That deal is very significant to us and more importantly it is a tipping point in Europe. European global outsourcing is coming of age. In the view of customers we are all equal."

Nilekani also acknowledged the impact that rapid economic growth in China will have on the IT market but said it is more of an opportunity than a threat to the Indian companies.

"China has to be part of your equation and we are investing $65 million in China," he said. "It is a fast growing economy and a lot of our global customers have ambitions in China."

Ian Marriott, research VP at Gartner, agreed that the offshore outsourcing phenomenon will cause a reordering of the top global IT service providers.

He said: "The top 10 providers of the future may be five of the traditional outsourcers and five of the Indian companies. There will certainly be a shakeout and some [of the traditional outsourcers] will drop away."

Silicon.com's Andy McCue reported from London.