Hard times hit Bangalore
Summary
Topics
As they arrive at work, they must pass a clipboard full of newspaper cuttings enumerating job losses at outsourcing companies in the city. MphasiS axes 200 in Bangalore, says one. Sun Microsystems lays off 150, Sapient cuts 300 and so on.
The company's strategy is having a curious impact on employees. As measured by company executives who do not want the firm's identity to be disclosed, workers are performing better, making less demands of the company and appearing to value their jobs more highly than before the clipboard went up.
The chilling effect of the economic downturn is being felt all over Bangalore, India's outsourcing hub. Companies and workers are refashioning their strategy to face the reality of an intense downturn.
For the outsourcing industry's young workforce, long used to double-digit annual pay hikes and job hops at will, this reality is especially hard. After many years of industry growth on steroids, Infosys co-chairman Nandan Nilekani told me in a recent interview, many young workers had been lulled into a feeling that that was normalcy.
Workers are now recalibrating themselves to demonstrate higher productivity and greater loyalty to their employers. They are not taking their jobs for granted, nor are they assuming the subsidized lunches at the café or the free buses to work will last forever.
For others, the truth is taking time to sink in. At Nasscom 2009, the recent outsourcing industry annual conference in Mumbai, industry executives were bitterly complaining about the hard times.
The irony did not escape everyone. Upon his return from the conference, one industry leader told me that people at the conference who still had jobs were complaining - even as they ate the best cuisine from all over the world and drank good wine for free.
Many Indian outsourcers are remodeling their businesses to prepare for the full impact of the downturn. For a long time, these firms have remained India-centric in their operations.
This will have to change, according to Siddharth Pai, managing director and partner at the outsourcing advisory TPI India. Indian outsourcing companies will have to globalize by taking on delivery capability from different cities across the world, Pai told me.
The good news is that the current recession has made global acquisitions cheaper than ever before for the cash-rich among the outsourcing firms.
The recession is also forcing outsourcing companies to revamp their payment strategies.
Many top Indian outsourcing companies, including the Bangalore-based Infosys Technologies and Wipro, started off by executing work on hourly and day rates. Many have since moved up the value chain to project-oriented pay scales and annuity-based contracts.
Now they have been forced to take a percentage of the value of business delivered as their revenue.
The outsourcing contract between Nokia and New Delhi-based outsourcing company HCL Technologies is an example of a modern outsourcing deal.
Last month, HCL Technologies signed a five-year global help desk and desktop management outsourcing agreement with a new customer Nokia - whose vendor was previously IBM.
HCL Technologies will charge Nokia on a 'per ticket per month' or 'per device managed per month' basis. The outsourcer will deliver multicountry and multilingual (13 languages) services through its global delivery centers in China, Finland, India, Poland and the U.S.
Indian outsourcers have been growing at 30 per cent rates for several years. Many of their founders and employees have only experienced personal success. Now they are slowly discovering that the biggest fallacy of the global downturn is that outsourcing is recession-proof.
In Bangalore, this means 60 per cent off signs at downtown stores are not enough to draw in the crowds that were the norm even a year ago. And there is no stampede for booking apartments even after the country's biggest developer dropped prices by a further 30 per cent last week.
This article was originally posted on silicon.com
Talkback Most Recent of 5 Talkback(s)
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Sun Microsystems is an outsourcing company?
I don't really think that's Sun's core business.
IT_User26th Feb 2009 -
Perhaps she doesn't know
I suppose it's possible that she doesn't know what Sun's core business is. Sun has a campus in Bangalore, and she appears to be based in that area, so maybe that is all she knows of them. It is more likely that Sun was sited because they are an employer that has laid off people in the area recently. However, you are right that she makes it sound like Sun is an outsourcing company.
This was originally posted on silicon.com. Saritha Rai appears to also write for InianExpress.com, among others, and all her posts are India-centric. It appears that this article was aimed at an Indian audience, and not at the American IT workforce, who would probably like to see the outsourcing industry (wherever it may be in the world) fall on its face.
You can read a short bio about her at http://www.globalpost.com/bio/saritha-rai .
FTH
fromthehip27th Feb 2009 -
RE: Hard times hit Bangalore
The author didn't even touch on the more tangible irony. That the offshore outsourcing firms are now experiencing decline in jobs, while they are the ones corporate raiders have let take millions of our jobs from North America. Why doesn't the Obama administration place tariffs on offshoring to mitigate job loss?
bgroves@...27th Feb 2009 -
RE: Hard times hit Bangalore
Well the IT outsourcing did not take 'millions' of jobs away. It did took hundreds of thousands of jobs away. The real job losses are in the manufacturing sectors, take ford, gm , etc.
Garments ? gone to china, hardware manufacturing? gone to china.
Even safety pins,baby food, pet food, toothpaste etc. now have to imported from china.
And IBM,Accenture etc. are IT services cos from the US, that have operations in these countries, enabling a US co. to make profits from lower costs and win contracts of US companies.
goldston1st Mar 2009 -
Reminds me of...
the Tech Support V cartoon at illwillpress.com, where the Indian outsource tech says "My job has been outsourced. The irony..."
LeonBA15th Apr 2009
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