Outsourcing Toolkit

India - threat or promise?

Peter Judge ZDNet.co.uk

Published: 31 Jan 2003 12:11 GMT

Outsourcing to India could be an emotive issue for IT pros over the next few years. While techies in Europe and the US are getting laid off, there are massive recruitment drives in India. While we look forward to flat spending, India has an IT industry that is growing at 30 percent per year.

And the two things are connected. The Indian IT industry is growing by outsourcing large parts of the West's IT. When you are told that your company can no longer afford your services, there will be several reasons. But for some of you, one of those reasons may be that there are people in India who can do it cheaper.

There are other places doing the same thing, including the Philippines, China and now Eastern Europe, but India has the best-established pedigree. For 20 years now, software and other products have been developed in India, because the sub-continent has plenty of people with engineering skills.

And it is moving on to the next stage, one which promises to "hollow out" many IT departments -- and other parts of companies -- in the West. Now the business skills are there too, and Indians are beginning to offer "business process outsourcing" (BPO) which takes over whole functions within western companies.

Some call centres will go there, with staff working shifts to deal with people in Europe. In other cases, customers will still talk to people in their home country, but all the back-end parts of the job -- the legwork, the forms and the processing -- will be done by people and IT systems in India.

This is not a fantasy. The speakers at the FT's Outsourcing to India conference this week had many examples to back up their ideas. And when the conference opened up to questions, it was clear that the delegates were not seeing this as some theoretical issue.

The questions from the floor focused on the practical issues: "How do I sell this to my board?" asked a speaker from a bank. "What functions should I move to India first?" asked a man from a finance house. It was clear that these people are thinking of taking this further.