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India Outsourcing Increasing

July 1st, 2004 · No Comments

WSJ writes that Indian companies have benefited from the outsourcing controversy in the US – what that did was publicise India’s low costs and expertise.

In the high-technology hub of Bangalore, two to three Western companies are opening operations in the city every week, say officials at Software Technology Parks of India. More companies are turning to India to do everything from software development to back-office work.

Revenues for call-center businesses grew by 46% to nearly $4 billion, or about 3.3 billion, during the year ended March 31. And the number of workers in India’s technology sector is projected to have jumped by 23% to more than 800,000 in the period, according to the National Association of Software and Service Companies, or Nasscom, the Indian technology industry’s trade body. Nasscom expects India’s exports of software and services to jump more than 30% to $16 billion in the current year ending next March, about the same growth rate as last year.

Many Indian and American executives say the U.S. criticism of outsourcing is generating important buzz for Indian technology companies, highlighting their low costs and expertise. “During the last six to nine months, we’ve received hundreds of millions of dollars of free advertising,” said Vikram Talwar, chief executive officer of Exlservice Inc., a New York company that processes financial claims for U.S. banks and insurance companies in India.

There are signs that the outsourcing trend is broadening. U.S. companies continue to make up roughly 80% of the companies outsourcing work to India. But now, Chinese, Japanese and a number of European firms are opening offices in Bangalore and other cities. Companies like Chinese telecommunications-equipment maker Huawei Technologies Co. and Switzerland’s STMicroelectronics NV are using India’s English-speaking engineers and designers to expand into new markets and create new products. And a growing roster of smaller companies are beginning to outsource work to India.

Tags: Emerging Markets

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