Why Indian IT companies are outsourcing – to US
Two decades after they began running US operations from Bangalore and other cities, Indian IT companies are hiring Americans to do work that was once outsourced. What gives?
On a top floor of an office building in Atlanta's posh and wooded Buckhead district, workers man a call center for a US healthcare company. Their computers' 'copy/paste' function and Internet browsers are disabled as they answer questions about plan benefits and handle personally sensitive data. Their manager watches from a glassy office.Skip to next paragraph
Subscribe Today to the Monitor
Nearby, recent Georgia Tech and University of South Carolina graduates train in how to handle information-technology (IT) clients. Attitude is the most important part of working with customers, the trainer says. Hadn't they learned that from Donald Trump's "The Apprentice"?
These scenes are hardly out of the ordinary except for one thing: The managers and trainers are from India. So is the employer, outsourcing giant Wipro, which set up shop here in 2008. Just as Japanese automakers began manufacturing in the United States in the 1980s, Indian outsourcing companies are locating in the US to reap similar benefits. Wipro calls it "reverse outsourcing."
Some of the benefits are, surprisingly, economic.
"You can never compete [here] with an India cost model," says Suraj Prakash, vice president for global delivery organization at Atlanta Development Center (ADC), Wipro's American IT center. But as the company takes on more ambitious projects – working on a large software development project, for example – it spends more on travel to handle the intensive interaction with the client and sees higher costs from time delays in getting feedback and errors from not understanding the local business context. "You easily end up spending all of that money doing rework," Mr. Prakash says.
Other Indian outsourcing firms move in
That may be one reason why Wipro's two larger competitors in India are also locating in the US. Infosys is planning a subsidiary in Dallas that will hire locals and seek US government contracts. Tata Consultancy Services (TCS) has reportedly hired at least 300 at its new campus near Cincinnati.
Locating in the US "helps us and our customers reduce overall infrastructure and overhead costs" and better serves customers, writes Amar Naga, the head of TCS's US center, in an e-mail.
"These companies have gained so much experience that there's a process of maturation," says economics professor Usha Nair-Reichert, of the Georgia Institute of Technology. "They really are trying to become global players."
A bid to expand into new markets
Locating in the US not only helps companies handle more complex projects, it offers them an entree to new markets.