India must look beyond cheaper staff
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(InfoWorld) - Indian outsourcing companies have to move beyond low-cost services on an hourly-rate basis to offering complete services, according to an outsourcing consultancy. A model that is based primarily on the low cost of Indian staff will not be sustainable by Indian providers in the long term, as the cost advantage is eroding, said Dennis McGuire, chairman of outsourcing consultancy firm, Technology Partners InternationalÂ (TPI) in Houston, Texas. Large competitors like IBM and Accenture are also expanding operations in India to take advantage of low-cost staff, he said. âWhen I go to a restaurant, I want a chicken dish and not a rate-card telling me how much the chefâs time will cost me,â McGuire told reporters Wednesday. There isnât much risk, nor promise of great reward, in the current labor-cost arbitrage model adopted by Indian providers, he said. Indian service providers must make more investments in senior staff, and industry specific applications and tools if they want to win big contracts, said Peter Allan, a partner at TPI. They will have to develop industry-specific applications, such as a billing system for telecommunications companies, around which they can offer services to customers, said Siddharth Pai, another partner at TPI. Indian providers have been reluctant to trade current margins for long-term revenue opportunities because investors expect far higher margins from Indian service companies than from their multinational competitors, TPI said. Only recently have these outsourcers indicated that they are willing to accept total outsourcing deals that involve transferring customer staff and assets, Pai said. The reluctance of Indian outsourcers to address the lower-revenue domestic outsourcing business will also hurt them as the market shifts from plain coding and testing to higher-end transformation services, research firm Gartner said this week. Working on projects in India in these new areas would give Indian outsourcing companies the opportunity to prove their capabilities to customers abroad, said Partha Iyengar, research vice president at Gartner. Indian outsourcing companies such as Infosys Technologies and Tata Consultancy Services are attempting to go up the value chain into IT consulting and services delivered around their products. â They still donât offer the full array of services, and in applications they only have products in the core banking area,â Pai said. However,Â business is still strong for Indian outsourcers, according to data released by TPI. Of the number of contracts greater than $50 million awarded last year, the share of Indian service providers went up to 11 percent from 8 percent a year earlier, according to the consultancy. Their share of the total value of these contracts went up to 7 percent from 4 percent a year earlier, it said.
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India's drive to adopt a western economic model is threatening those who make their living from the jungle.
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LONDON Reuters, the news agency and financial-data company, said Thursday that it would triple its number of employees in India by the end of next year, as the company tries to meet stringent cost-cutting targets.
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One Fool sees growth in India -- but also a little too much heat.
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India&#39;s business process outsourcing companies could attain revenues of up to $50 billion by 2012, but the industry will need greater investments in education and infrastructure by the government, according to a new report released Tuesday.
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India's top information technology (IT) body said India's booming outsourcing and IT research sectors face a looming skills shortage and the nation's universities must train students better to fill the gap.
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Sirva is feeling the pinch as organizations look to spend less on employees based overseas.
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Michael Brightman is reminded daily that workers in New Delhi do the same job he does. His Indian counterparts routinely direct AT&amp;T customers to him for long-distance billing problems that the New Delhi workers can't answer.
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Indian outsourcers already have a large share of outsourced application development and maintenance and are dominant in business process outsourcing. The country is now targeting a larger share of the market for remote infrastructure management services (IMS), and is planning to more than double revenue from these services to $15 billion by 2013.
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India's IT research and outsourcing  industry is facing a skills shortage, a leading industry expert has warned.
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Plans to outspend Boeing in India could mean more commercial and defense business in the country.
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India&#39;s IT services market is forecast to grow to $10.73 billion by 2011, at a five-year compound annual growth rate of 23.2 percent, as outsourcing emerges as a more favored option for companies in India, according to research firm Gartner.As companies are finding it more difficult to hire and retain staff in their IT departments, they are looking at external service providers as an option, hoping to also cut down costs, and better manage growth in the process, Gartner said Tuesday.Indian user companies compete for staff with Indian outsourcing companies and Indian operations of multinational companies, which hire new staff by the thousands each quarter.Staff attrition is however not the key reason why companies are outsourcing, said Arun Gupta, chief technology officer, at Shopper&#39;s Stop, a top Indian retail chain. Driving outsourcing in India is a growing demand for new technologies and applications. Shopper&#39;s Stop has six IT projects in progress with another 12 projects planned for the next six to 12 months.Rather than creating and managing a large IT organization in house, the company is working with service partners to support its 45 IT staff, Gupta said. Some of the functions it outsources are network maintenance, desktop and server maintenance, monitoring enterprise resource planning (ERP) applications, and software development, he added.A number of large banks and telecommunications service providers are already outsourcing key IT operations, though the key winners so far have been multinational services companies. Many Indian outsourcing companies had neglected the Indian market in favor of exports, according to a survey last year by Gartner. But that may be changing as the&#160;weakening dollar puts pressure on rupee&#160;realization from exports.IBM,&#160;Tata Consultancy Services (TCS), and Wipro together accounted for 26.1 per cent of IT services vendor market share in India last year, according to Gartner. IBM was the top vendor, with 11.2 per cent market share. TCS and Wipro occupy the second and third positions with 10.9 and 4.1 percent market shares, respectively.However, the Indian IT services market is still fragmented, with the majority of the market being serviced by smaller local players that account for close to 40 per cent of the IT services market, according to Gartner.&quot;We have looked at smaller players for very small and specific jobs, but for larger jobs, running into a number of years, and which require a variety of skills, we look at large Indian companies or multinational services companies,&quot; Gupta said.The key segments of the Indian IT services market are hardware maintenance and support, software support, consulting, development and integration, IT management, and process management, Gartner said.
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How does offshore outsourcing's reigning champion, India, compare against China on software quality, staff costs, and more?
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London, Aug. 19: Yet another fault has been found by British unions with the quality of outsourcing to India but this time perhaps with some justification.
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IBM has introduced new procedures to evaluate its staff in India with an eye to improving quality, with staff that don&#39;t make the grade being asked to leave.&quot;We are pioneering new ways for our people to certify their skill levels as both a validation of their value to clients and to reinforce the quality of our employees&#39; personal skill sets,&quot; a spokesman for IBM India said Monday.India is a key hub for the global delivery of services by IBM, as the company takes advantage of the country&#39;s large pool of skilled labor. IBM had 73,000 staff in India at the end of last year, up from 53,000 at the end of 2006.As a result of the new procedures, IBM has dismissed over 700 entry-level programmers from its global services delivery operation in India after they failed to measure up in performance tests, according to a report Saturday in local newspaper The Economic Times.However, the number of staff actually laid off is likely to be less than 200, according to informed sources, who requested anonymity.Indian operations of multinational companies and Indian outsourcing companies compete with each other for scarce staff. The news that IBM had asked staff to leave in their hundreds has taken local media and analysts by surprise.IBM said it was screening and testing some of its employees, but would not comment on the reported lay-offs.Even as staff salaries are increasing in India, IT services companies are insisting on a higher performance from their staff. The appreciation of the India rupee against the US dollar has also meant that staff salaries in India have got more expensive.
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High stress and low status have soured many grads on the telephone work. Now India, the outsourcing capital, finds itself having to outsource
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Indian automakers are plagued by a shortage of skilled workers, inferior product quality and deficient highway infrastructure, among other challenges, according to a new study.