India is now outsourcing? Go figure…
India reaped new fortunes in its recent rise as an outsourcing powerhouse. But now India hears footsteps: China, the Philippines, Hungary, the Czech Republic and several Latin American countries are luring offshore outsourcing jobs as well.
The surprise: Some of India’s offshoring giants are offshoring themselves, fueling the next round, and U.S. firms are joining in.
Indian outsourcer Tata Consultancy Services has opened offices in Budapest, Hungary and Hangzhou, China. Last year it acquired a 1,300-employee outsourcer in Chile, and it plans to add 1,500 to the 485 people at its Brazil arm. “Several years ago we decided the India-centric model had to change. We needed to offer seamless delivery from around the globe,” says Subramanian Ramadorai, chief executive.
TCS rival Infosys Technologies set up shop in Shanghai, Mauritius and two Czech cities, Prague and Brno. A third big Indian player, Wipro, has new offices in Shanghai and Beijing and plans to open soon in Bucharest, Romania.
U.S. firms are expanding beyond India, too. Call-center giant Convergys recently opened offices in Dubai and Budapest. IBM Global Services is adding staff in China, Hungary, the Czech Republic and Brazil. And Accenture is adding staff in the Philippines, China, Slovakia and the Czech Republic.
In the 1980s outsourcers in India did low-rung jobs such as data entry and some software development. In the 1990s they expanded by doing larger software projects and by taking over whole IT systems and back-office functions such as accounting for U.S. and European corporations.
Now they draw a bead on more sophisticated services–engineering, research and development, and designing auto parts, sections of aircraft wings and chips for wireless services. Other countries are moving up the ladder, too. SPI Technologies, a firm in the Philippines, is hiring lawyers and law professors to do analysis for a large U.S. legal research outfit.
The global expansion is here to stay. Spending on offshore information technology services will nearly triple in six years to approach $60 billion by 2010, says research firm Gartner. Engineering design “will be the next big wave of global sourcing options” in manufacturing, the firm says, predicting that spending on outsourced R&D and engineering will grow tenfold in the same period.
More broadly, offshore employment in IT, banking and six other areas will have doubled between 2003 and 2008 to 1.2 million jobs, says McKinsey Global Institute.
READ: Why Indian IT firms are hiring globally
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