Indian outsourced services providers are casting around for ways to bill their customers more, while avoiding obviously inflating costs, says research published today.

Analysts at Forrester Research have cautioned that a dose of economic reality is entering the offshore services market in India as labour costs in that country rise, skills are increasingly in demand, and the Rupee appreciates against the spiralling dollar.

Indian service providers are struggling to maintain profit margins, and although providers were initially more focused on finding ways to insulate their clients from local inflation, says Forrester, today they are equally focused on finding ways to charge clients more for similar services.

"Sourcing and vendor management professionals must understand the insulation techniques as well as the newest pricing tactics in order to negotiate the best deals today," advises chief author of the report, analyst Stephanie Moore. While rates themselves have been subject to fairly minimal increases, "important price increases are often embedded elsewhere", she concludes.

The report advises CIOs to pay particular attention to rates for onsite visits by offshore specialists, which often escape close scrutiny, together with definitions of the working week, and clauses referring to currency inflation and travel.