January 17, 2007 04:00 ET What Could Cause India's Outsourcing Bubble to Pop?

BAINBRIDGE ISLAND, WA -- (MARKET WIRE) -- January 17, 2007 -- ( has announced the addition of a new advisory article, "The Future of Outsourcing in India: 8 Scenarios," to its free report offerings.

Every forecast today talks about huge growth in outsourcing -- and particularly offshoring. Every major services firm is hiring at a furious pace in India and some of the numbers are truly mind-boggling.

--  IBM, which has about 39,000 employees in India, plans to take its
    India headcount to 55,000 by the end of 2007.
--  Dell India is expected to hire about 10,000 additional professionals
    over the next two years, taking its total India strength to 20,000 by 2009.
--  Accenture announced in 2005 that it would hire 30,000 professionals in
    India, China and the Philippines, with the majority in India, by 2008.
These figures are a random sampling of the kind of news published almost daily. But curiously enough, India itself is on the brink of a manpower crisis. The education system is unable to produce enough "quality" workers. Further, shortsighted political leaders aren't doing enough to reform the education system.

In parallel, the widening difference in earning capacity between the educated middle class and upper classes and those that are unable to participate in India's economic boom are worsening social tension. This manifests in outbreaks of violence, such as what has been seen in some Indian cities recently. It's further fuelled by political exploitation of rising tensions along the lines of caste and religion. If this trend accelerates, the risk perception of US customers will worsen.

Another threat is that the loss -- or perceived loss -- of service sector jobs in the United States can only lead to more opposition to outsourcing and offshoring in America. asked ValueNotes, a well-known analyst firm focused on outsourcing, to explore multiple situations and scenarios for the future of offshore outsourcing in India. It has developed two "situations," both of which examine the potential impact of changes in the availability of a qualified workforce in India and American perception of outsourcing.

What could India's outsourcing scene be like in 10 years? The possibilities range from exhilarating to frightening.

Readers will find the entire report here:

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