Recently I read in Economic Times this article about a forrester report. The report said over 60 per cent captive centres in India are struggling and this trend would further accelerate the move favouring third-party outsourced vendors by 2009. Running a outsourced IT services firm this is a topic of significance and interest to me, I have lot to say, but I will try and keep this post brief.

In the early 1900s the trend was to do everything yourself to ensure quality, classic example for this was Rockefeller’s Standard Oil, India’s Tata and others world wide. They didn’t have much of choice to do it any other way as well. Rest of the industry (eco-system) didn’t exist or was not yet ready. In the late 1990’s the trend with Jack Welch in GE and Louis Gerstner with IBM was to focus on your core competence and outsource everything else. This helped cutting costs certainly but more than that freed management focus and time to do what the company was all about in its core. This is why Indian IT companies are successful and I believe will help them to retain their edge.

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