In recent months articles in The Wall Street Journal and Forbes.com have postulated that outsourcing information technology work to India was losing appeal. They said that high employee turnover in Indian outsourcing companies and rapid growth had reduced work quality and upset Western customers. These same articles argued that salaries in India were rising so quickly that Eastern Europe, British Columbia, and even Oklahoma would soon become competitive with India. I’ve just spent two weeks in Indian speaking to top executives at some of the largest outsourcing companies and I believe reports of the demise of Indian outsourcing have been greatly exaggerated.
To the contrary, the Indian outsourcing industry has entered a new era of growth. Infosys, Satyam, HCL, and other IT outsourcing majors that once specialized in lower-value tasks such as application maintenance and business process outsourcing are seeing increasing success in providing outsourced high-value tasks such as total IT outsourcing, R&D, and business transformation services. I believe that not even terror attacks and a global recession will deter an impending revival of Indian outsourcing or a reshaping of the industry into a provider of high-value, unique services. Here are six reasons why this is true.
1. Faced with high turnover, rising salaries, and a weak public education system, top Indian companies started investing heavily in workforce education and development. As a result, since 2000, Indian industry made dramatic improvements in the education levels, productivity, and quality of its technical workforce. These companies retrained tens of thousands of low-level IT workers in advanced product design and development techniques to give them more valuable skill sets required to crack higher-value service offerings and fill managerial ranks. These investments have started paying huge dividends. A few years ago, the Indian IT industry relied on experienced managers returning home from the West to fill…