Source: Economic Times
As Western countries outsource more and more to India, in a bid to maintain and sustain the outsourcing momentum, Indian IT majors are seeking to establish or enlarge their footprint in Europe by acquiring European firms and retaining their employees, because the conception is a share culture and background helps them understand project requirements of European or American clients far better than their Indian counterparts.
Take Infosys Technologies for example, its recent takeover of Phillips captive BPO business in Poland has brought 765-Polish employees on its rolls. Then there is TCS, Satyam and Genpact with a presence in Romania and Hungary, while Wipro Technologies has a centre in the Czech Republic. The common underlying factor here is that most Indian IT majors seem to be eyeing Eastern Europe as a base, despite the fact these countries are high cost locations, where salary levels are over 2.5 times that of the Indian IT industry.
However, in the opinion of analysts, it is becoming more and more imperative for Indian firms to establish a global footprint, meeting market demands, regardless of the costs.
And, Infosys management has understood the point, going ahead with their Polish acquisition in spite of a KPMG-NASSCOM report on Emerging Destinations for Indian IT / ITeS industry confirming, Poland is the costliest country in the region (Eastern Eruope), where salaries are three times higher as compared to India, with the difference only increasing where seniority is concerned.
The report adds that most Eastern Europe locations are costlier than India in terms of IT professional salaries, and a similar trend prevails in Central and South American region, though the difference is not as wide as in Europe.
Even so, Avinash Vashistha, CEO Tholons, an off-shore advisory firm says having a global footprint is an immediate requirement for Indian firms, as their American and European customers are beginning to demand a few IT / ITeS services be provided from certain off-shore locations, taking their domain expertise into consideration.
As well, compared to India, the East European region has strong multi-lingual capability to service the Western European market, or say Philippines with its superior voice services, especially for the US market, mainly due to the fact that the latter was occupied directly or indirectly by the United States after the Philippine - American War (1899-1902). Victimised in this relationship, the Filipino masses suffered indignities, violence, extreme poverty, racism, including unsubstantive reforms. A relationship that was a fiasco and a tragedy for the people of Philippines!
As India and the US draw closer, the Indian Government should take cognizance of America’s past dealings with other countries, such as, Vietnam, Angola, Nicaragua, El Salvador, Columbia and elsewhere. Closer to home, the government and Ministry of External Affairs (MEA) officials should educate themselves on the American government (the deadly duo of Richard Nixon and Henry Kissenger) and CIA’s encouragement of the Khalistan movement and the evangelisation of large parts of North-eastern India, including why the Americans militarily occupied Philippines.
Doing so during the late 1890s at the time of the Spanish-American War, US Commodore George Dewey descended upon the shores of the Philippines and destroyed the Spanish fleet in Manila Bay. The Americans had a number of goals for occupying the Philippines. The first, to create a military presence for accessing the markets of China, secondly, to utilise the country’s raw materials for the US industry. US President William McKinley gave the third reason, when after praying to ‘Almighty God’, he said a message came to him that Americans were in the Philippines to ‘uplift and civilise and christianise’ Filipinos. Quite obviously, he was not aware (very much like our own government and MEA officials are unaware of the pitfalls of letting one’s guard down when doing political, commercial or any other business with Westerners or the Chinese) that the Spanish colonisers had been ‘christianising’ the Filipinos for the past 400-years, and against whom they had consistently rebelled.
Coming back on track, Siddharth Pai, a partner in TPI India says, specific client requirements can only be provided from Eastern Europe, including certain European regulations that also make it necessary to provide services from this region.
Though, salaries in the East European region are certainly higher than those in India, this does not automatically translate into more expensive operations. While, analysts feel these locations are 20 – 30% higher than Indian operations, however, higher productivity, pricing and fewer quality issues, nullify the greater expense.
S. Sabyasachi, Senior Director, NeoIT counters a European presence, saying: “Global presence and the associated delivery capabilities will enable Indian firms to seek big deals with multi-geography, multi-service and multi-language requirements.”
Moreover, this should not send shockwaves in the Indian IT industry, as the expansion into overseas locations in no way diminishes the importance of India. Pai feels, the Indian footprint in these European locations, will not be big, at best the IT firms will hire round and about 250 – 300 people.
So, while Indian firms require a European base, they will continue to expand and grow at home on the sub-continent. Just a business requirement, not an indication of IT jobs fleeing West!
