Bangalore: Global corporations that look at offshoring IT and BPO work to countries like India are not just looking at short term gains, but how offshoring gives returns over a 10 year period, an IT industry official said.

"Customers are looking at offshoring for not just quality of the service or cost benefits and core competence, but their survival and their future," NeoIT managing director Pradeep Mukherjee said in his talk on "BPO Leaders: The Road Ahead" today (Nov 2, 2004).

NeoIT, an advisory firm that helps companies offshore sourcing from India and other nations, had conducted business management of about $ 1.5 billion in 2003.

"More and more clients are futurising on what we should do today; execute a business model and ensure that the decisions we take gives us returns 10 years down the line," Mukherjee said.

Besides looking at vendors who have financial strength, productivity and capabilities to scale, he said, most of the multinational clients who engage into offshoring look at technology and process, besides compliance of legal laws and data protection.

"Compliance and security are major drivers in the choice of the IT and BPO vendor, besides the geography (where they offshore)," Mukherjee said, adding, India should buck up its act on bringing out the Data Protection Act soon.

"Companies with easier regulatory climates will benefit and there is an increased concern over security and data protection," he said.

Mukherjee said India was facing competition from several countries including Canada, Hungary, Philippines, Russia and China in taking a slice of the $ 18 billion to $ 20 billion offshore BPO work, which is expected to raise to $ 42.2 billion by 2008.

He said the East European countries were to gain faster growth and the only way Indian firms can differentiate was in getting into higher value services.

Dismissing China emerging as a major competitor to India in the BPO space in the medium term, Mukherjee said, "We believe that China will be a bigger threat in IT field than in BPO in the next seven to eight years."

"It will take some time for them to get over the language issue," he said.

Earlier, giving a talk on "Information Technology: the Newontext", IDC India managing director Pradeep Gupta said the US would continue to dominate offshoring IT work having a market share of 74 per cent by 2008, down from the present 78 per cent of $ 10 billion.

He said Western Europe and Asia Pacific, which presently offshores 20 per cent of the global offshoring, will increase it to 25 per cent of the $ 18 billion market in 2008.