Indian IT industry has discovered a formula to reduce production costs by 80%

Indian Information and Technology industry, a $146 billion market, has now started evaluating their projects basis cost-saving and are thus, shifting them from offshore to onshore. This has made the offshore and onshore debate even more relevant now as with the expansion of automated technology, the need of shifting projects offshore becomes beside the point.

On condition of anonymity, a chief information officer of a European bank that outsources projects to one of India's top three software firms told Economic Times, "When you have the potential to automate certain projects, what difference does it make whether that project is onshore or offshore? It makes that debate irrelevant."

The ET report further cites that the automated technology has the potential to reduce production cost by 80% in commoditized service lines.

Peter Bendor-Samuel, CEO of outsourcing advisory Everest Group in his blog post said, "After more than a decade of achieving value through the offshore labour arbitrage model, one would think that mature organisations that have built GICs or captives, or organisations with extensive use of third-party outsourcing providers, would be at peace with the model. We expected them to move to a model of arbitrage plus automation. But the level of peace and comfort with offshore arbitrage is much less than we expected, and companies are expressing their desire to use robotics automation to repatriate their work."

The robotics automation has the capability to disrupt the traditional ‘pyramid model’ of Indian IT industry. After recognizing the worth of automated technology, industry’s top-notch organizations like TCS, US-based Cognizant and Infosys are speeding up their efforts and also spending heftily to get the expertise.

Image: thinkstock