Monday, June 21

View on Indian Reforms

Barry Shlachter from Star-Telegram writes :Reforms set the stage for India's boom

As Americans learn every day, bits and pieces of their economy are being dismantled and shipped overseas. India gets the lion's share of business-process outsourcing -- 35 percent -- compared with China's 15 percent, and 6 percent each for Canada and Mexico. At last count, more than 700,000 Indians work in outsourcing activities.

A remarkable convergence of factors has put India in the right place at the right time to become the world's white-collar outsourcing leader: an abundance of cheap but educated labor that speaks English and access to cutting-edge telecommunications technology that links U.S. clients or consumers with Indian facilities as if they were next door.

Help lines for utilities, credit cards, computer makers and others are now staffed in Bangalore, which controls 35 percent to 40 percent of the country's export software and business-services work, as well as in other southern Indian cities, including Mumbai, Pune, Hyderabad, Kolkata and New Delhi. Telemarketing, financial research, tax returns, book editing, medical transcription, mortgage processing and payroll chores are increasingly being outsourced. Software design and programming is even bigger.

While offshoring work makes up a minuscule slice of India's economy, it was expected to bring in revenues of $12.2 billion in India for the year ending in June. That's up 28 percent over the previous 12 months, according to India's National Association of Software and Services Companies, the outsourcers' industry group. About a third was earned by call centers and business-process operations, the rest by software developers and programmers.

It's not all one-way traffic.

Many of the computers used by Indian call centers and software design offices are American-branded.

"Dell, Dell, Dell," rattles off V.S. Srinivasan, a Mumbai-based business-processing consultant to Mastek, which has forged a joint venture with Carreker, a Farmers Branch firm that specializes in outsourcing for financial institutions. "Compaq, Compaq, Compaq."

In April, IBM signed a 10-year agreement to handle all information technology for India's largest cellphone company, Bharti Televentures, a deal that Big Blue estimated would be worth at least $700 million. The same month IBM paid $160 million for a major Indian call center called Daksh.

And many of the Indian outsourcing providers have opened offices in the United States, hiring executives and sales staff.