Most discussions that I have had/read about is about how the increasing costs at offshore/low cost locations and the forced increase of onsite presence for these companies due to visa issues is going to eliminate / diminish the cost arbitrage advantage that these providers have traditionally had. But here is an interesting prediction by the Everest Group.
We expect increased wage inflation in the low-cost destination countries, and increased fourfold pressures as currencies of developing countries increase relative to their nation currencies of the Euro and Dollar. Nevertheless, we still expect it will become cheaper for providers such as Infosys, Wipro, TCS and others in that class, to provide work out of their low-cost destination locations relative to the cost of delivering them onshore. This is not to say we expect pricing drops from these firms; indeed, they will likely be vocal in pointing to their rising costs as a strong rationale for pricing increases. This arbitrage increase will apply to the overall cost of delivering the work, and may be misunderstood at an individual person or job class level. The reason for this surprising and counter-intuitive prediction is that we believe the class of providers that has mastered talent factories will be able to apply lean process improvements, and continue down-shifting their work to more junior and cheaper resources, overall widening an already growing arbitrage gap. This downshifting of work, which has been under way for a number of years, will be accomplished without materially affecting the quality of the services delivered.
Offshore providers are probably looking at various ways to make this prediction come true, but its not going to be easy. To make this a reality I think a big factor would be the use of tools / prebuilt solutions / use of products / platforms / solutions, the whole version 3.0 of the IT Services industry.
Prashanth Rai
As a part of the Sapphire conference got to spend sometime with the CIO of 
