Industry reports hail India as the fastest growing IT and ITES hub. It is expected to capture over 70% of foreign businesses by 2010, backed by the skills of over 250,000 professionals.

Global companies today are outsourcing numerous knowledge oriented processes to vendors situated in various parts of the world. According to a report, this business is expected to reach USD 17 billion by 2010, of which USD 12 billion would be outsourced to India alone.

Apart from India, countries such as Russia, China, the Czech Republic, Ireland, and Israel are also potential vendor countries. In the future, it is envisaged that off shoring has a high potential as it is not restricted only to Information Technology (IT) or Information Technology Enabled Services (ITES) sectors and would also include other sectors like Intellectual Property-related services, Business Research and Analytics, Legal Research, Clinical Research, Publishing and Market Research.

Amongst all this frenzy, companies need to take a step back and examine factors that influence selection of a vendor when business is being outsourced.

Choice of Country is a key component in selecting a vendor as there is a large knowledge pool and a significant cost arbitrage. Countries like India, Philippines and China are front runners in providing these services. The nature of work demands advanced analytical and specialized skills. India today is one of the best markets for highly analytical skills. It is estimated that over 95% of the staff in these sectors in India are at least graduates in engineering, finance, market research, fluent in English and possess a ready familiarity with providing off-shore high value added services.

Quality of Management of the organisation in a global world and managerial talent is a critical factor in selecting a potential vendor. Ideally, companies should ensure that the management team has deep industry knowledge in the sectors that are being marketed.

Along with a strong management, Financial Stability of a company is a key factor. It is important that the vendor is suitably financed to be able to withstand the uncertainties of business besides being able to fund expansion as your business grows.

One of the ways to select a partner is to request for a pilot project. In other words, Proof-of-Concept this is applicable, especially in the banking and finance industry. These short-term pilots ideally allow both clients and vendors to assess the viability of service deals and areas and to fine-tune deals which typically stretch over 5-10 years.

Finally, prepare a comprehensive list of questions for the team which will eventually manage the ‘knowledge process transfer’ and insist on a detailed teleconversation with the various members of the team to ascertain knowledge levels. This implies Drilling down the Research team.

Infrastructure is another critical part of the customer’s value and supply chain. The focus is providing strong delivery capabilities which will assure global clients and provide them with seamless trouble free service. Vendor’s needs 24/7 fail proof connectivity to collect data, perform secondary research and transmit data globally. This will provide the vendor reduced time to market for product development and enable effective servicing of global clients.

Off shoring is an inevitable organizational innovation and it will continue to grow in popularity, while offering multiple gains. Understanding the abilities of the vendor to deliver present and future requirements of the organisation becomes the underlying benchmark for choice of partners in your business.