Off Shoring Will Account For Highest Value Creation Over Next 5-10 Years
22 Jul, 2005, New York, NY
More than 60 percent of major corporations are off shoring to India
Cushman & Wakefield Holds Forum on Real Estate Implications of Outsourcing to India
India is a "hyper growth economy", real estate executives were told at a Cushman & Wakefield forum on the country and its exploding real estate market. The growth of off shoring and its impact on corporate real estate and investment were highlights of the event, held in Midtown Manhattan.
Cushman & Wakefield reported that the Indian economy is likely to have more than 7.5 percent real GDP growth for the third consecutive year, and continues to strengthen its position among the top five fastest growing economies in the world. Improved performance by agriculture, manufacturing and the service sectors in recent quarters lends further credibility to the stability of this growing nation. The growth in the services sector is led by technology and prominent off shoring of services to India.
"The spin-off economic benefits from off shoring make India an irresistible place for global corporations," said Sanjay Dutt, National Manager, India, Brokerage Services, Cushman & Wakefield. "Off shoring will account for the highest economic value creation for corporations over the next five to 10 years."
India is the preferred destination for off shoring services because of competitively priced, highly skilled professionals, a deregulated economy, a comprehensive legal and tax system and a strong operating financial system. A recent study has revealed that more than 60 percent of the Fortune 1000 corporations are off shoring to India either directly or indirectly. The services outsourced to India have consistently grown at a compounded annual rate of more than 30 percent over the last three years.
"The infrastructure requirements of the off shoring industry are both unique and dynamic in nature. They pose unique challenges in project design, structuring and implementation," said Arsh Chaudhry, managing director, Client Solutions, Cushman & Wakefield. "The corporations that are outsourcing require real estate, as well as other physical infrastructure services, to be packaged together and offered as a seamless solution."
The challenge of creating and operating good quality infrastructure is significant, due to the rapid growth in off shoring. In the year 2004 alone, off shoring accounted for more than 13 million square feet of new office space leased, nearly 65 percent of the total office space leased across the active markets in India. Cushman & Wakefield estimates the requirement of office space over the next five years from this industry will be in excess of 125 million square feet. The firm also expects approximately 12 to 15 cities would support the expansion in off shoring operations and thus would experience significant economic gain.
All of this activity has helped fuel the investment markets in India.
"Capital is coming to India from many parts of the world," said B. Srinivas, National Manager, India, Capital Markets, Cushman & Wakefield. "We expect that to continue into the next decade."
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