More to India IT outsourcing than cost, scalability

U.S. multinationals have led the charge into India, where overall the number of IT services subsidiaries has grown to about 200 centers as they look to update their legacy infrastructure.

Large multinationals have established about ten new IT services centers in India over the past two years, taking the overall total to about 200.
On April 8, Bangalore-based consulting firm Zinnov released a whitepaper on India's industry to supply wholly-owned IT centres to global companies.
It found that among Fortune 500 companies, about 125 have a presence in India, and this is expected to double by 2015.
The report found that Americans led the charge into India, pointing to the likes of Allstate and Wal-Mart, followed by European majors, such as British Telecom. They primarily head to Bangalore.
There were close to 45 large banking and financial services centres in 2012, an increase of about 10 percent over the past two years. Healthcare and life sciences was an emerging segment. Companies such as Royal DSM and Sigma Aldrich recently established centres to deliver IT services in the future, following the lead of long-time occupants Novartis and Cerner.
Zinnov consulting manager Sundararaman Viswanathan, said global companies use their Indian IT subsidiaries to update their legacy infrastructure.
"It is interesting to note that the reason for setting up new centres is far more strategic in nature than the tactical reasons of cost arbitrage and scalability," he added.
The report also said this modernization work would flow on to Indian outsourcers and IT service providers, to the tune of US$1 billion.