Can the Indian outsourcing firms be ever global ?
DATE: July 21st, 2009
I came across an interesting article by KPMG on how the Indian firms have been slow in their penetration of the Chinese markets (LINK) . Granted that the markets in China are some of the toughest markets for anyone, be in Indian firm or Western firms to establish a presence in, it still brings about an interesting point on how global truely are the Indian outsourcing firms ?
Based on the recent earnings by the Indian outsourcing firms – TCS, Infosys ,looks like these firms have managed to weather the economic storm and with prudent cost management have managed to stabilize. A number of these firms still predict a lower fiscal forecast but have shown steady margins and revenues. That is an overall good sign for the Indian outsourcing vendors.
The question is that in the long run , how truely global are the Indian firms ? For comparison you have to look at the larger firms like the TCS, Infosys, Wipro,HCL, Cognizant and Genpact. The smaller and mid size firms are local domestic firms with a global ambition but still will remain domestic firms, till they achieve scale.
The Big 4 Indian IT firms have had global ambition but still have a very high percentage of their operations and staff based out of India. TCS e.g. with a total headcount of 141,642 end of June 09 quarter has approx 8.3% of their staff or around 11,600 people of non-Indian origin.
Operations center setup outside of India including China, Mexico, eastern Europe or US are all for specific client requirements rather than general operation center.
In the economic downturn, having staff all based out from India was not necessarily a bad thing as TCS e.g. was able to recall close to 1000 people outside India back home to save cost.
The question is that can the Indian firms maintain a global branding, a global presence by continuing to be so India centric ?
Will this be an disadvantage for these firms as the ‘transformational’, consulting opportunities start to re emerge and come closer to client sites. Plus with the politics of countries, will ‘offshoring firms’ continue to take jobs away from a country ? Right or wrong the current India centric model has helped these firms manage their cost and survive the downturn. Question is what the offshoring firms want to continue to do – offshore rather than be global ?
Mohit Sharma is the CEO of Corrystone Global Partners. Corrystone is an outsourcing consulting firm providing benchmarking, operational risk compliance, operational audit and transition management services to companies with operations in US and India. We work with firms which are exploring India or low cost US locations for IT, Business Process work and or have established IT/operations in India and US and are looking at ways to further optimize cost and manage operational risk.
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