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Retail sector to spend up to $2.5 bn on IT outsourcing

The global outsourcing market stands at $400 billion and 85% of the work is done onshore and the remaining in offshore, a study says.
PTI | By HT Correspondent, New Delhi
UPDATED ON JUL 31, 2007 04:57 PM IST

The retail industry in the country is likely to spend about $1.5-2.5 billion over the next five years on outsourcing their IT operations, according to a study.



The global outsourcing market stands at $400 billion. Of this, 85 per cent of the work is done onshore and the remaining in offshore, a study by outsourcing research firm Everest Group said on Tuesday.



India has about 30-40 per cent share in the $60 billion offshore market, it added.



"According to our estimates, cumulative outsourcing spend on IT in retail alone could potentially be between $1.5-2.5 billion over the next five years," Everest Group Country Head Gaurav Gupta said.



IT outsourcing alone can improve EBIDTA margins by 30-50 basis points for the retailers, which will enable them to increase their bottomline besides allowing them to drive additional 4-5 per cent growth with the same capital, he said.



Outsourcing can create growth opportunities by reducing capital investment required per unit of growth, the study stated. It also helps in reducing operating costs through more efficient and competitive service delivery

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