India Shining . . . . . but Outsourcing too !

Mastermind [IBM Business Consulting Services] | POSTED: 12.11.04 @00:54

Certainly the “India shining” slogan is a passé now. But something which has been overlooked in the backdrop of MNCs’ outsourcing to India is perhaps the very own domestic market. The Indian companies are also quick learners and are looking forward to outsourcing their IT infrastructure or services; as a means to cut-cost and concentrate on their core business operations. Indian IT majors heard the alarm bells when the mega giants like IBM, Accenture & EDS forayed into the Indian services market. But little did they do to shift their focus from the lucrative overseas market to the maturing domestic market. History was made when Accenture struck major deal with Dabur, Hewlett-Packard with Bank of India and Ashok Leyland and IBM & Nokia with Bharti Televentures. The deals would be for a period of say 5-10 years and involves 100s and 1000s of million dollars. This proves that the Indian market has matured and domestic outsourcing provides a huge opportunity for vendors and service providers. But, the Indian IT Majors risk ceding this local opportunity to the global players. Global research organizations and NASSCOM may be depicting rosy pictures about domestic outsourcing in the Indian context; but the billion dollar question is: how much prepared is the Indian counterpart to capitalize on the “home ground advantage”. Can they really get “On” to challenge IBMs’ “On Demand” model? A modest beginning has been made from the top Indian IT companies but still one fails to understand why they haven’t been able to clinch any such deals ahead of their foreign counterparts.

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India cold to hot money

If Accenture, HP and IBM have won the deals in India what does that really mean? These MNCs also have increasing presence and work force in India and China-- so may be the work is won by a global company but work is still done primarily by Indian professional? IBM is surely not getting majority of work done in US-- is it? Global shell, local core? And increasingly, with global work force for IT companies, will there be true differences and different cost structures for companies due to labor part of the cost and capabilities? In fact, I noted with interest that a few Indian companies are outsourcing some software work in China! And perhaps we will see some Chinese companies doing same with manufacturing when the cost rise at home? The bottom line is, capital and labor are all getting globalized, and the differences will be in regulations, risk taking, and management.

"This proves that the Indian market has matured and domestic outsourcing provides a huge opportunity for vendors and service providers." No it proves only that India is the preferred international low cost IT center...............India is far from maturing............