Access to a low wage yet skilled workers allowed local global technology services giants Infosys Tata Consultancy Services. There is no doubt that have over the last decade. By Frost and Sullivan consolidates the idea that India’s outsourcing has already peaked and there are a number of factors to blame. The Indian rupee appreciated that the idea’s of the outsourcing has already pepaked and there are a number of factors to blame. The Indian rupee appreciated 8.4 percent against the US dollar and touched 41.14 to the dollar its highest rate in nine years. The significant reason for the concern for the outsourcing sector, the upward value of the rupee continues to put a squeeze on the earnings. It had cut margins by the about 2.5 percentage points.
In the cost efficiency, the companies looking to the outsource that have long seen India as their most cost-efficient vehicle. With the wage inflation running 15 percent, the India can no longer use the siren song of its labor that being the cheapest. The competition like China can offer their services at a lower cost, while the firms like the Infosys are stuck recruiting from outside the country because the comparable Indian staff is growing too expensive. The Age Old Infrastructure, this is as much as the economy continues to boom, it sustain its position when the Information Technology operations spend considerably on the backup systems to fight regular blackouts and the 300,000 engineering students who graduate each year may be short of the level needed to support modernization of the infrastructure and the industry growth.
In Bangalore, if people consume that being rerouted by the tech support to a call center. It seems that India’s grasp on the SSO market is at a long term risk and it is just so happens that the call might be answered by someone in Shanghai. The occasional news stories about the companies returning the work earlier offshored to India, the logic behind offshoring and its financial impact remains. There are problems in doing the work long distance, coordinating the work global teams is costlier than coordinating such a work locally. The intellectual property issues could be important, however offshoring is now tried and tested enough and the large corporations are deeply committed to it. Most of the large multinational corporations like IBM will have their largest workforces in India by 2010. This is creating rich ecosystem in a number of Indian cities especially Bangalore.
Their Indian operation are being declared global centers of excellence whose value goes well beyond just cost savings. Some smaller firms have faced high initial costs but even they are particularly the technology firms of the Silicon Valley, it have committed to Indian operations. The firms such as Infinera have substantial Indian operations that are critical to their success. This is to retreat that would require a major reorientation of their business strategy.
REFERENCE:
http://www.businessweek.com/debateroom/archives/2007/10/indian_outsourcing_has_peaked.html#share
