Posted on 08/22/2004 2:33:58 PM PDT by Willie Green
For education and discussion only. Not for commercial use.
Bangalore -- If you think this is a year of impressive growth for offshoring to India, as has been signaled by the first quarter financial results, you ain´t seen nothing yet.
Western firms and independent IT vendors are for the most part marking time, waiting for the US elections to be over. The jobs traveling to India are mainly resulting from the need to take care of growth and attrition and little because of layoffs.
This has resulted in as much as 15 percentage points being shaved off the overall volume growth.
Avinash Vashistha, CEO of the offshoring consultancy neoIT, predicts that next year IT services offered out of India are likely to grow at 40 per cent. The potential for Indian companies in particular is underlined by the small part of global IT services delivered by them.
If this is the optimistic scenario for IT services, for ITES or BPO the potential for growth of offshoring is even greater. So far only a small part of BPO services has migrated to India, dominated mainly by call centre work.
But call centre work is only 3 per cent of the universe of BPO work. “The major challenge and potential lies in getting a slice of the remaining 97 per cent,” says Vashisth.
In software, the ramp up in the immediate future is likely to take the form of the $100-500 million multi-year deals looking to come to India. There is nothing amiss in the ramp up for Indian companies being incremental in nature as that is also the pace being adopted by MNC vendors with captives in India.
They are ahead, with $100 million plus deals already in the bag but the pace of growth for both Indian third parties and captives is gradual.
If offshoring of IT services to India is likely to touch 40 per cent next year, what will enable Indian companies to beat the competition? What is or will remain their USPs?
Indian firms have stolen a march on their nearest competitors, the Philippines, in the last five yeas by improving the capabilities and supply of their middle-level managers. This has enabled the firms to deliver both quality and improved productivity, asserts Vashistha.
There will be a challenge to Indian IT but it will come around three years down the line. And it will be posed by Russia in product development and support, and by Vietnam (its people costs are around half of India´s) in PC-based and new technology-based applications.
But Indian advantage will remain in large enterprise application and end-to-end technology services.
Indian edge will also persist in the telecommunications vertical in which companies like Sasken, Subex and Tarang represent successes in different sizes in both product ownership and development services. This has great potential as once a company´s products or IP click, the cash register simply keeps ringing.
In BPO, future traction is naturally likely to come in transaction processing and more and more elaborate back office services but this will have a significant corporate restructuring dimension, feels Vashistha.
Some of the growth will come from a ramp up in both MNC captives and Indian third party operations. But there will be instances of BOT deals maturing, as also MNCs setting up shop the quick way by acquiring small captives.
But by far the most interesting will be MNCs selling their captives, taking partners in their captives or accepting third party business for what has till now been their captives handling only in house work. GE has the ability and the desire, according to news reports, to accept third party business. EXL has capability to offer in its own vertical, insurance.
Willingness to take on third party work can be the stepping stone to divestment once the business is seen to be maturing. WNS of today was a part of BA earlier. There are also instances of Indian third parties like Crossdomain, till now serving MNCs only in India, seeking to venture out to the developed markets.
“These developments will take time. But captives, and through them the market, will have great capabilities. And some of these captives will become third parties,” says Vashistha.
At a time when there are questions over the future of third party Indian BPOs in an increasingly scale-dominated world, he sees “the market dominated in 5-8 years by third parties, some of which are former captives.”
Other side of the same coin. My point is that the
people DOING the work are Indian. US-owned companies are the CLIENTS of WiPro, Tata, Infosys, etc.
Please re-read, reconsider the part of my post about
Mercedes and the Carolinas.
BTW at one firm I had worked at, one of the software
sales persons (who was from India) told me --in confidence -- that the Indian written software he
was required to peddle was "the worst piece of sh*t
he had ever seen."
Slightly off-topic, I recall reading (in the famous
"I can't remember where" article) that Tata is also
involved in heavy industry and also makes cars.
a) Can anyone confirm this?
b) How do the cars compare to others
1960's Japanese
early 1970's American
modern US
modern Japanese
Yugo
If US companies were truly concerned with the bottom
line alone, the executive vechicles would all be
used Yugos :-)
Tata do make cars that seem to resemble more the late 80s quality of JApanese cars -- close but no cookie. To believe what a salesperson says about techie stuff -- whether good or bad, is just plain wrong
You wrote:
"...To believe what a salesperson says about techie stuff -- whether good or bad, is just plain wrong"
I'm sorry. *I* was careless in my posting.
The salesman I refer to was referring to his own
company's products, while I was working at the
very same company. That makes a difference,
don't cha know. :-)
Cheers!
An excerpt from your link read, in part:
"A review on the Tata Indica-2000 cannot be complete with this little story: the Japanese automobile industry in the '60s was best signified by cars dead on the roadside. "
Grammatically, it is correct to say either
cannot be complete with
or
cannot be complete without
However, common idiom is to use 'without'.
Obvious flames, trolls, cheap shots, etc.
are tastefully and politefully declined.
So when do US executives start buying these for
their corporate fleets to save money?
"...No more so than when US-owned companies used SAP or BAAN or when European-owned companies used American s/w or Accenture"
Look for my earlier postings on this issue.
I explicitly compared to European companies
outsourcing to US. :-)
Please, re-read and then tell me what you think.
Cheers!
Assuming that you are asking about Dr. Agarwal's recent discovery and not Ramanujan's body of work, I cannot think of any commercial impact except potentially to a specialized company like RSA.
RSA is a company built around the idea that factoring is hard; approaches to factoring often involve determining if various numbers are prime.
So, yes, it could potentially have some commercial impact (most likely negative, though), though I don't believe that anyone has done anything yet that would have impact on RSA.
There are also potential (very low likelihood) national security implications to the extent that any of our crypto systems might also be weakened -- but this is not so likely since excellent probabilistic primality tests already existed, such as Rabin-Miller.
But it is a good result, one that people have looked a long time for. It's a fundamental result, so something else could be built on top of it that could have a big impact.
You wrote:
"RSA is a company built around the idea that factoring is hard; approaches to factoring often involve determining if various numbers are prime.
So, yes, it could potentially have some commercial impact (most likely negative, though), though I don't believe that anyone has done anything yet that would have impact on RSA.
There are also potential (very low likelihood) national security implications to the extent that any of our crypto systems might also be weakened -- but this is not so likely since excellent probabilistic primality tests already existed, such as Rabin-Miller."
That was 'xactly the area I had in mind. Thanks!
Oh, yes, I just got around to it.
[Asbestos suit on. Sarcasm torpedo ARMED. FIRE!]
1) The first name of the author sure doesn't
sound like O'Brien. Comments?
2) Note the main source in the article is the
CEO of NeoIT which makes its money by
arranging outsourcing. Apparently they
are trying to drum up business by predicting
business.
Why not, there are some trying to drum up support for Kerry by "predicting" what the President will do.
And there are others who can clearly see that Bush and Kerry are marching to the same drummer.
They may be a little out of cadence, perhaps, but they share the same compass.
It sure is interesting how some old fashioned liberals such as Mayor Kock can not only see the difference between the two, they're voting for the President. Koch explained things best for people like him. He said that yes, he is a liberals, but he's a thinking liberal.
I guess that would explain the big difference between people like Koch and the die hard Patsies who are re-emerging from their bunkers for another election...Koch thinks.
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