BANGALORE, India -- in this bustling city dubbed the silicon plateau, the frenetic pace of hiring for software development
operations, call-center activities, and BPO (business process outsourcing) -- much of it to serve U.S. companies -- is giving
rise to a booming tech sector.
"Nowadays, I am happy if I can hire a shop assistant who can speak a smattering of English," said a manager at an upmarket
retail chain in Bangalore, who asked not to be named. "Those who had a reasonable command of the language have been grabbed
by call centers and BPO firms at more than twice the salaries we can pay."
Although some American executives have begun to express reservations about offshore outsourcing (see "Staying Stateside,"
page 44), confidence abounds here as Indian technology leaders see burgeoning demand for increasingly sophisticated services.
"It's unlikely that anything can go wrong for the Indian outsourcing industry," said Ravi Ramu, CFO of MphasiS BFL Group,
a Bangalore software services and BPO company. "There is no competition for India at present, as countries like the Philippines
and China cannot scale to offer the large number of skilled, English-speaking people that we have in India."
Indian outsourcers say they are moving up the value curve, from primarily software coding and maintenance to new areas such
as IT consulting, systems integration, infrastructure management, package implementation, and product development.
Outsourcing to India is now being driven from the top -- by CEOs and CIOs -- and includes strategic development work, unlike
a year ago, when new clients typically came to India for staff augmentation or software maintenance work, said Sangita Singh,
vice president of strategic marketing for the technologies division at Wipro, a Bangalore software services company. Wipro
will have added approximately 12,000 employees for its outsourcing business by the fiscal year ending March 31, 2004, he said.
Still, there are signs the country may be falling victim to its own success. Large, multinational technology services companies
such as Accenture, Electronic Data Systems, and IBM Global Services are hiring staff in thousands in India and are blamed
for pushing up salaries. "By tapping the low-cost manpower in India, these companies will be better able to compete for business
at the low end that has traditionally been the stronghold of the Indian outsourcing companies," said Ravindra Datar, an IT
and BPO services analyst at Gartner India Research and Advisory Services.
The BPO industry is also under pressure to move up the value curve. Margins in the call-center business are falling as it
is highly commoditized, said Vikram Talwar, CEO of Exlservice, a BPO company with a marketing front end in New York and operations
in Noida, India. Attrition rates of approximately
40 percent are pushing up salaries in the call-center industry, making survival in this business quite difficult, he adds.
Although almost any service that can be delivered remotely can be outsourced to India, Indian companies advise caution when
deciding which aspects to outsource. "My advice to clients is that if you have never outsourced offshore before, start with
your back office rather than the call center," Talwar said. "When you give out call-center work, you are putting the service
provider at the India end in direct contact with the ultimate customer, and you carry a far greater risk of your business
being impacted."
Not all software development and implementation work can be done offshore, according to Wipro's Singh. Development of applications
that require a high degree of customer interaction or that have a lot of interdependencies with other applications already
deployed by the customer are typically done on-site, she added. But on-site work does not preclude Indian companies from getting
the business, as Indian software companies are geared to offer on-site work as well.
Meanwhile, Indian services companies are investing heavily in their own IT and communication infrastructure, which has become
the lifeline of the Indian outsourcing industry.
The object is to meet the booming demand from offshore, which is transforming the IT industry in India. Nandan Nilekani, CEO
of Bangalore-based Infosys Technologies, succinctly addressed the transformation in January at the World Economic Forum in
Davos, Switzerland. "Everything you can send down a wire is up for grabs," he said.
E-mail
Printer Friendly
Reprints
(InfoWorld) - In the litigious world we live in, deploying a unified communications platform in your enterprise could...
