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IT Group Passes Outsourcing Milestone in India

Passing a controversial milestone, European IT giant Capgemini has revealed that it will soon have more staff in India than it does in its home market of France – in an indication of the growing power of the subcontinent in the global outsourcing industry.

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Capgemini is creating a new business information management unit in Bangalore, India’s Silicon Valley, which will help increase its workforce in the country to beyond 21,000 people, more than its headcount in France of about 20,000.

“We are able to access abundant application and technical skills in business information management in India and we can scale up there much more quickly than we could in onshore locations,” said Paul Nannetti, general manager of Capgemini’s global business information service line.

India’s computer services and business process outsourcing industry experienced one of the most difficult periods in its history during the global financial crisis as many of its largest clients, the world’s banking multinationals, fell deeply into the red.

A recent McKinsey study predicted the sector would miss its target of hitting revenues of $60bn by 2010 as it faces pricing pressure and falls in the volume of business.

However, the industry has recently begun clawing back business, as its clients begin work on integrating acquisitions made during the downturn and try to cut costs.

Before the crisis, India’s domestic IT leaders, Tata Consultancy Services, Infosys Technologies and Wipro, were already facing growing competition in the low-cost offshore outsourcing business from global leaders such as Capgemini, IBM and Accenture. The western multinationals began ramping up their workforces in India to enable them to tap low-cost talent in the country.

US-based IBM’s Indian workforce was 74,000 in 2007, the latest figures available, but earlier this year was reported to be shifting more jobs to India. Accenture has been increasing its numbers in India at a similar pace in recent years.

Salil Parekh, Capgemini India executive chairman, said the group’s headcount in the country was expected to show “high single digit” percentage growth this year and would next year register a double digit increase. Capgemini’s Mr Nannetti said the company was establishing a new business information management centre of excellence in Bangalore that would start with a workforce of 1,000, scaling up to 3,000 in about 18 months.

Business information management, a service that helps companies to improve their collection, use and analysis of data, is one of the areas for which India’s large talent pool is particularly attractive.

It can involve the use of multiple sources of information, from the weather to shipping schedules, to build a more complete picture for a client of its business performance.

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Source: FT.com
MTT insight URL: http://marketingtrendtracker.com/article.aspx?id=4859

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