A slow but steady shift from native Indian to American outsourcing base in India – number of IBM employees to exceed 100,000 by end of 2008
Harish Baliga
Dec. 15, 2007

It is a gradual shift but the Indian outsourcing companies are slowly losing ground to the American and European outsourcing companies. The lack of ‘exceptional’ talent required to cater international needs have thrown Indian outsourcing industry into a doldrums.

It is easy to say that the talent will come countryside. That really does not happen. The talent pool in India is not infinite. The wage inflation is rampant. The American and European companies are in the process of eliminating Indian outsourcing companies who really work as middlemen trying to make decent bucks by managing the local Indian talents.

Take the example of IBM India. It has recruited, in the last five years, the best of Indian software talent. The employees of TCS, Wipro, Infosys and others are eager to join the American firms. The reason for the attrition is simple. After all American and European firms can market far better than the Indian firms in America and Europe. Indian companies tried to counter these foreign corporate giants by purchasing some weak second tier American and European companies. But that did not work. Indian companies just wasted some money.

IBM for example have deep roots into American corporations. It is much easier for them to acquire a contract than TCS or Infosys. In addition quality conscious American corporations can trust IBM more than the Indian companies. On top of that outsourcing is a political hot potato in the US. Outsourcing through IBM is regarded safer than going to an Indian outfit in Bangalore or Hyderabad.

As a result Indian software companies have hard time in front of them. Their failure comes from their inability to produce world-class software products. You can really go so far by supplying people and constructing software based on user requirements.

IBM Corp's expansion in developing countries shows no sign of relenting. The technology company has revealed that it now has 73,000 employees in India, almost a 40 per cent leap from last year. Next year, it is estimated that the IBM India employees will exceed 100,000.

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