Is Ramalinga Raju the most feared man among some North Americans - even more than Osama Bin Laden?
Suriti Ojha, Special Correspondent
November 01, 2004

Who do you think is more feared in US and Canada - Ramalinga Raju or Osama Bin Laden? Well no one really knows till US Presidential Election results are out on late Tuesday, November the second. 

According to Financial Post, Canada, overseas companies like Satyam have North Americans worried sick they'll soon lose their jobs to companies in developing countries, which can sell services far more cheaply than Western firms. For example, most of the major Canadian banks outsource some of their work to firms in India.

Ramalinga Raju is a feared man.

It seems an unlikely position for Mr. Raju, the diminutive founder and chairman of Satyam Computer Services Ltd., an information technology services firm based in Hyperbad, India.

Despite the hand wringing, Mr. Raju downplayed the impact of his company and other overseas competitors have had on the North American economy.

"In my opinion, the fear is misplaced," said Mr. Raju, who was in Toronto on October 27 to visit customers and employees. "This isn't a zero-sum game."

Companies are operating in a global environment, he said, and its just common sense that they have to outsource to compete against other firms in their sectors

Large companies can choose to lose either "10% or 100%" of their jobs unless they shift to a lower-cost operating model, he added.

Satyam recently reported a 28% gain in second-quarter profit and raised its full-year earning forecast thanks to higher orders.

Satyam makes money by selling software development and other services and then ships the work overseas where it can be done at a much lower cost.

Mr. Raju said companies with global operations have to adopt cost cutting as a mantra.

"It's not that they're doing anything better than competitors like [Montreal-based CGI Group Inc.]," said Forrester Research analyst John McCarthy. "They're just doing it with a different cost structure."

Mr. McCarthy said Satyam is threat to CGI because the Indian company can sell its technology outsourcing services to U.S. companies for 20%-25% cheaper.
CGI declined to comment yesterday.

"The nearshore [outsourcing] model has been bypassed almost completely by the offshore [outsourcing] model," Mr. McCarthy said.

Meanwhile, U.S. politicians and pundits have made the transfer of jobs to overseas firms, a practice known as "job jacking," a hot potato in the presidential election. John Kerry has made job losses to India and other low-cost countries a major theme of his campaign to unseat George W. Bush.

Forrester Research expects the U.S. economy to lose 3.4 million white-collar jobs by 2005 as a result of outsourcing to foreign countries.

Services giant Accenture, for example, has said it plans to have 10,000 workers in India by December.

Mr. Raju said North Americans are only seeing one side of the picture. The outsourcing phenomenon has helped create 900,000 jobs for India, but other jobs will be gained in Canada and the U.S., as Indian firms, like Satyam, set up shop here, he said.

Mr. Raju said companies like International Business Machines Corp. and other large tech service players will look to India for workers as the country continues to graduate roughly 500,000 to 600,000 engineers from its renowned university system each year.

Courtesy, Financial Post, Canada