ALM Properties, Inc.
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Commentary: Is India Still an Outsourcing Haven?
India's outsourcing sector comprises both business process and IT outsourcing, and it has been growing at an annual rate of about 37 percent over the last few years. Growth has jumped from approximately $3.1 billion in 2004 to nearly $11 billion in 2008. Yet, despite such a strong market to protect, a senior Indian special forces source described the response to the Mumbai terrorist attack as having "far too many command centers, with each one trying to best guess the other, [leading] to confusion and delayed operations", adding: "there appears to have been a lack of detailed, precise planning".
While one can never protect against every eventuality,
There are other protections that can be included in any outsource agreement, such as step-in rights that allow a company to take over and perform the services themselves or arrange for a different third party to deliver the services for an interim period. In an extreme instance where an outsource service provider could not perform the services at all, the company should have the ability to terminate the contract. The best measures of protecting a company's data and business critical applications are, however, always preventative. Provided a company has suitable safeguards in place to cope with a future disaster on a similar scale to the recent Mumbai attacks, there seems to be no legitimate reason for companies to rethink their outsourcing arrangements.
While it is likely that businesses will approach the Indian outsourcing market more cautiously in the short term because of the terrorist attack, Mumbai, like all other cities that have been the victim of terrorist attacks, such as
When contemplating an outsource to India, companies must bear in mind that there are many outsourcing providers spread across different areas, such as Chennai, Bangalore and Pune, to name a few. A large terrorist attack on one city should not be a reflection on the country as a whole or indeed as a sign of things to come. While the location of an outsource provider may be of some importance, the focus of any outsource must be on the benefit derived from the services being provided while at the same time ensuring that certain key protections are built into the contract. It is possible to mitigate damage from a terrorist attack and that starts with ensuring industry best practice security at any outsourcing provider's facilities and agreeing a detailed and robust disaster recovery and business continuity plan.
Cynthia O'Donoghue is a partner at Reed Smith.
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