Global IT outsourcing clients such as General Electric, Citibank, along with many others are gradually allocating a portion of their business to localized vendors in different countries. There seems to be a growing feeling among these companies that instead of getting over-reliant on offshore locations such as India for their entire outsourcing needs, it is better to localize the sourcing wherever possible.

Ness Technologies of Israel, Softtek of Mexico, and CPM Braxis of Brazil are a few such examples of companies that are slowing nibbling into the pie that had till now belonged almost entirely to major IT outsourcing destinations like India.

“From the customer’s point of view, this is a risk diversification strategy,” says Jimit Arora of Everest Group, an outsourcing advisory firm in India. Customers who have a large-scale dependence on India are increasingly looking at alternative suppliers that are localized and specializing in niche areas.

At a time when the leading Indian IT firms such as TCS, Infosys and Wipro Technologies are trying to gain a foothold in the emerging markets of East Europe, Asia and Latin America, there is a considerable challenge being put to them from the local rivals in these regions who possess local strengths.

However, this trend of “near-shoring,” or using localized vendors is still quite limited in its scope. “For the large multinational clients, off-shoring to India continues to be a priority,” said an executive at one of the leading Indian technology companies on the condition of anonymity. The newly emerging IT outsourcing rivals are not yet in the same league as India with huge or long-term contracts from the clients. But they are certainly achieving selective business because of their niche and localized expertise.