The Hindu : India calling

Online edition of India's National Newspaper
Sunday, Feb 29, 2004

Opinion

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India calling

IT companies are still descending on Bangalore in large numbers. Harichandan A.A. on the scene.

CLUSTERS OF companies, Indian and foreign, in cities such as Bangalore are driving a fundamental change.

The centre of gravity of trade and business is swinging back towards the East. India is seen as a vantage point from which to do business with the rest of the region.

"In just the last month, I have been approached by three IT companies in the U.S., who want to offshore some of their marketing services to India," says the CEO of a consulting firm who does not want to be identified. "One of them is a respected Silicon Valley e-business firm, which already has an offshore unit here." The companies want the Bangalore firm to do market research, develop and maintain their websites, write periodic white papers and newsletters that would promote them in the industry and among potential clients.

More telling is the example of Pink Rocade, a billion-dollar Dutch IT services company, coming to India three months ago. It is not just the English-speaking people from the U.S. and the U.K. who are coming to the city. Companies now face pressure from clients, to deliver more for less by offshoring to India.

Take analysts. A few years ago, if one mentioned TCS, Infosys and Wipro, "yes we have heard about them but so what," would have been the reply. Today, "Gartner" for instance, "has a core team of high-powered analysts focussing exclusively on the offshore space," industry sources said. Other firms such as Forrester and IDC are also keenly following what is happening here.

Global consulting and IT services companies such as IBM and Accenture are ramping up their Indian operations at unprecedented rates. Technology companies too, such as Microsoft, Intel, Oracle, Motorola, Texas Instruments, Peoplesoft, Honeywell and Dell have aggressive expansion plans in India. Large multinationals, such as early mover GE, German multinational Siemens and British Bank HSBC are doing the same thing.

As for venture capitalists (VCs), the mantra was "if you are a start-up and you don't have an India strategy, you don't get funding." It is even more so today with VCs focussing more and more on Bangalore.

So, was the so-called backlash potent enough to hurt Indian business? The concern was more in the BPO space, since IT services are more specialised and technology intensive, said Kris Gopalakrishnan, Chief Operating Officer and Deputy Managing Director, Infosys Technologies. In the short term, this could hurt the Indian IT services industry since decisions may be delayed.

Long term, "we believe that once the data is presented and as the economy improves and more jobs are created, this may not be a problem," Mr. Gopalakrishnan said.

Sudip Banerjee, president, Enterprise Solutions, Wipro Technologies, said "we continue to get requests to participate in large tenders and move from being vendors to strategic suppliers." What has changed is that "Clients say, `don't use our names.'"

If companies such as IBM and Accenture implemented India-based offshoring strategies, "they only legitimised with their exclusive clients what we have been doing," Mr. Banerjee said. With specific Indian company names coming up in U.S. Senate hearings, "it has given us the kind of brand equity we never got before," he said, only half joking.

In the long run, the problem may not be with resentment over jobs lost. Mr. Gopalakrishnan said, some 200,000 jobs may have been offshored (not just to India). But the total work force in the U.S. is 170 million. India itself employs only some 800,000 people in IT, IT Enabled Services and BPO. This would only reach about two million in five years, Indian IT trade body NASSCOM says, while the U.S.' IT workforce is over 10 million today.

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