Offshoring in Reverse

Sept. 17, 2007
U.S. tech workers suddenly in demand are being courted by Indian IT companies.

It's a testament to the ever-shifting dynamism of the flat earth that so much back and forth is occurring in the global IT outsourcing game. By now everyone knows about the big U.S. IT services companies (EDS, Accenture, IBM, etc.) acquiring and hiring in India. However, in recent years, the major Indian IT consultancies (including Tata, Infosys and Wipro) have similarly instituted big-ticket North American employee training and development programs in a bid to capture more U.S. market share.

Bangalore-based Wipro (which recently joined the ranks of SAP global partners such as Accenture, BearingPoint, Capgemini, Deloitte and IBM) has now come one step further stateside by buying U.S. data center specialist Infocrossing in early August of this year, potentially giving it an edge with U.S. customers concerned about sending sensitive company data to India.

The reasons for this "reverse offshoring" trend include the economic (the rupee's declining exchange rate versus the dollar), the political (a decline in H1B visa availability and concerns about immigration laws) and the cultural (to be closer -- both in a literal and figurative sense -- to their U.S. customer base).

Another factor is the IT labor shortage these firms are facing in their home country of India. According to Aberdeen's Ralph Rodriguez, "The rising demand for technology professionals in [India] placed tremendous upward pressures on wages. In turn, that pressure has accelerated job turnover." All of these factors are hurting Indian IT companies, or at least those that remain in India.

For the outsourcees' part, the dynamic is evolving as well. According to Mark Peacock of Archstone Consulting, while the scope of what should be outsourced is continuing to grow, the scope of who should be outsourced is actually shrinking.

Top Business Pressures Cited For IT Outsourcing
Reduce IT operating costs 87%
Enable IT to focus on strategic work 61%
Need for quicker turnaround in projects 34%
Recation to competitive analysis 29%
Need to accomodate 24/7 operations 27%
Source: Aberdeen Group
"Companies are being more realistic about the amount of people and the skills they need to retain to be able to properly manage their newly outsourced environment," he says. "While retaining more people hits the initial ROI, it probably improves companies' ability to capture benefits and improve the overall ROI."

Interestingly, some U.S. companies are finding the answers to their business process outsourcing (BPO) questions just south of the border, as Mexico hopes its investments in IT education and infrastructure pay off in U.S. market share.

According to a Gartner report, Qualitative Indicators of Country Suitability, Mexico received high marks relative to China, India, Poland, Hungary and Israel for its investments in technology due to factors such as language and cultural affinity, data and intellectual property security, government support, infrastructure strength, educational system, and political and cultural stability.

However, these same factors should also benefit the large U.S. IT services brands, including NCR, SRA and Unisys, as well as companies (such as Working Solutions) that have adapted Southwest Airline's famous "homesourcing" model to fit the business technology market.

See Also

About the Author

Brad Kenney | Chief Marketing Officer

Brad Kenney is the former Technology Editor of IndustryWeek and now serves as director of the mobile/social platforms practice at R/GA, a global marketing/advertising firm in New York City.

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