India's outsourcing bubble is bursting

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Because I work for an outsourcing company...

... I know that at least initially the driver for outsourcing was cheaper services. This is no longer true. For one, the rates are more than double of what they used to be 10 years ago, and the noticeable edge of cost-based outsourcing is disappearing. Second, anybody who claims that outsourcing companies provide no quality in service delivery isn't in touch with the reality on ground. Compare these companies to IBM, Accenture, EDS, CSC, Deloitte- to their American employees- and you will see that the difference simply isn't there.

Despite the fact that I work for an India-based organization, I'm not rooting for outsourcing as much as you may think. Your argument against outsourcing should not be about whether these services are of good quality or not. Because right now that is not a valid argument. It is time for you to speak plainly about the erosion of American intellectual capital, about falling educational standards, governance at the federal and state levels that is actually making these standards low, companies' greed and desire to satisfy Wall Street at the cost of its employees- it could go on and on. Today the larger Indian companies typically employ about a 10th of their global workforce in the countries in which they operate. Although this is a small part, it gives them enough edge and business knowledge to match or sometimes outcompete American competitors or traditional IT departments. Besides many of their engagements today are not necessarily application or desktop support, but could run the gamut from management consulting to infrastructure outsourcing/hosting and enterprise package application implementation.

In this scenario your recourse would simply be to be anti-free trade instead of talking about lower quality. Let me ask you a question: if the outsourcing companies were to build up so much intellectual capital as to demonstrate superior value clearly, would you then root for outsourcing? I think not. Americans do not care whether they lose their jobs due to whether value was offered by a consultnig firm or not. Unfortunately the American economy is tied to free trade at the hip. US companies sell an awful lot of goods in India both by export and local production. In view of the fact that India is projected to be the world's 3rd largest economy by 2050, I do not think the US government will curb free trade anytime soon- unless market forces dictate it. And that is why I think this recession may be of some help to you who still have their jobs(although it will mean less jobs being created due to slower investment).

I agree with an earlier poster that outsourcing companies could benefit from this to an extend in that lower value work can be outsourced more easily in this scenario, but with a weaker dollar, I do not think the high value work can be competitve enough to be outsourced on a large scale. In such a case, you with better skills will survive. Those who are used to spending their time supporting users on tried and tested applications which rarely bother them will need to hone up their technical and business skills. Yes, it will mean some tough times in terms of learning, but it will mean an opportunity as well.

Posted by: vijay_1976   Posted on: 09/30/08  (Edited: 09/30/2008 @ 07:19) You are currently: a Guest | Members login | Terms of Use

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