IT contractors and consultants based in Australia or New Zealand will be interested in this survey published by the Press Trust of India. It appears that the threat from outsourcing is not so clear cut as companies find out the hard way that relocating IT functions and projects purely on the basis of lower labour costs can backfire. 

The survey results from Diamond Cluster International open with this summary, 'The IT outsourcing boom seems to be over worldwide, including in India, as companies learn to be more strategic and selective but it's still too soon to call it the death knell, according to a new study'.

Of special note is the following comment. 'Canada is making headway as a haven for outsourcers. US-based buyers apparently believe that the higher cost of outsourcing to Canada is worth the gains in proximity, language and culture'.

It appears that IT companies in India are facing a double squeeze, from China where labour costs are even lower, and from IT professionals in developed nations who benefit from being on the spot, and who deliver a unique quality of service. The implications for IT contractors are clear enough, if they play to their strengths they can compete with anyone, anywhere.