Companies which have in the past relied on India for offshoring their IT services are looking for cheaper alternatives.
India is losing its appeal as staffing costs continue to rise and companies face the challenges of high staff turnover and strained infrastructure, reports BusinessWeek.
The country's "advantage as an offshore location is fast eroding - its attractiveness takes a hit with each passing day," wrote analysts at Forrester Research, in a report released earlier this year.
As outsourcing to India becomes more expensive, companies may begin turning to countries such as Argentina, Mexico and Malaysia to cut their IT costs.
The recent Shell outsourcing deal with EDS will see 1,000 new employees hired by the company in Malaysia, despite the company's thousands of IT workers in India.
The rising costs of outsourcing have also hit the public sector, where it is reportedly costing up to 75 per cent more than the market rate, according to a report from Compass last week, a company which helps users of outsourcing check whether they are paying market prices.
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