February 11, 2009 / 2:27 PM / 11 years ago

Perot Systems sees more work moving offshore

MUMBAI (Reuters) - U.S. computer services company Perot Systems Inc will shift more work to offshore centres such as India as clients try to cut costs amid the global downturn, a senior official said on Wednesday.

Margins would come under pressure as customers sought to get more work for the same money in the downturn, but things could start improving in the second half of the year, James Champy, Perot’s Chairman of Consulting Practice, told Reuters.

“I don’t think we will have extraordinary growth in 2009, the real challenge will be in our margins, profit,” he said.

While pressure on pricing had been there for a while, the credit crunch and economic downturn had sped up the process, he said.

“Many clients want to pay less for the work we are doing,” Champy said, adding he hopeful the pressure on pricing would ease in the next 6 to 12 months as the impact of government stimulus kicked in and clients realised the value of their services.

Perot reported its fourth quarter results on Tuesday. It said it saw earnings per share in the first quarter of 2009 at $0.23 to $0.25 compared to $0.24 in the fourth quarter.

The pressure on pricing and delivering cost-effective services has seen U.S.-based outsourcers look to move more work to low-cost locations offshore.

“We will move more work to locations like India. Many of our clients who have resisted offshoring before will be more receptive now,” said Champy.

Of Perot’s total workforce of 23,000, about 8,000 are outside the United States, and 70 percent of these are in India, he said.

“I see our offshoring mix eventually rising to 50 percent in the next five years,” he said.

Perot sees the healthcare segment, insurance sector and capital markets as growth sectors for the company.

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