Mckinsey Oct 2003 report on its insight into Offshoring Value addition is a bench mark report to the
future growth of IT industry inIndia. Since the article is published, the IT industry has moved from simple task migration to a more value added process reengineering activity. However still a lot is desired from the industry, to
transform the IT delivery from a transaction oriented model to a Value added model.

Indian IT companies ability to undertake task aggregation and Process level improvements is becoming more important now than ever before. The Wage arbitrage is no longer a source of competitive advantage. Even task level improvements can be considered as basic hygiene factors in customer expectations. As the industry matures to more value added activities, IT vendors ability to bring in Industry insight, Best practices and Risk-Reward models will be crucial to achieve real differentiation.

Indian Vendors realized early in the game, the importance of Domain knowledge and made several investments to build strengths in this area. However there is a need now to percolate the industry knowledge residing with a bunch of principals and SMEs down to the programmer level. Once this is achieved, every part of the IT vendors’ organization becomes a natural extension of Client IT departments.