India is arguably the world leader in the foreign offshore outsourcing market and the trends seen in 2004 strengthen the argument that India's services growth looks unstoppable. Service provider confidence is abundant and there are great expectations from the industry, but there are challenges facing India even as the optimism about growth in 2005 gains momentum. Global vendors will continue to set up offshore development bases in lower cost labor pools thus challenging India's position and targeting its high attrition rates. In 2005, many service companies will offer three-tier delivery and a network of global centers. Will India be able to compete globally with these increasing pressures? India's prominent position highlights the issues faced when reaching critical mass in offshore services outsourcing. Ironically, this very success is straining India's ability to deliver on the value equation. Despite the optimism about growth in 2005, India's booming offshoring business faces twin challenges of a shortage of skilled labor and rising wages.