Offshore Comes Home
3:00 PM -- If I were a high-priced consultant for, say, Bain Co., the following quote, from a U.S. spokesperson for Infosys Technologies Ltd. (Nasdaq: INFY), would make me sweat: "[Infosys's] main intention is to provide affordable consulting services in the United States and the rest of the world that can draw on India's productivity," Chelsea Hardaway told Asia Times Online in October. "There's just been a backlash against outrageously priced consulting. Our goal is to give clients a much higher return on their investment, and to make consulting more accessible to clients."
In other words Infosys, the Indian IT service giant that is increasing its revenues at, oh, 50 percent a year or so, is establishing a U.S. consulting arm to compete on both quality and price. If you're making half-a-million a year telling clients how to implement technology strategy, that's a scary thought.
I thought about this earlier in the week while reporting on the Wipro acquisition of Austrian chip design company NewLogic. (See Wipro's Wireless Expansion.) In another bit of "reverse outsourcing" -- which is poised to go from obscure economic term to official buzzword status in the upcoming election year, even though a Google search on the term still turns up fewer than 900 hits -- Wipro will actually have a European-based R&D shop, aimed at the relatively sophisticated wireless LAN market -- presumably paying European wages and taxes.
As they move into higher and more complicated technology markets, not to mention tech consulting, hot Indian IT firms like Infosys, Wipro Ltd. , and TCS are making acquisitions in North American and Europe and hiring Western developers, engineers, and consultants -- and, at least for now, creating good jobs (though at a much lower rate than the manufacturing and call-center jobs that are fleeing to the subcontinent). "When you hire locally, you hire as per the local requirement," Sanjiva Singh, EVP of SlashSupport, a Chennai, India-based tech support company that this year opened a small San Jose office, told Ela Dutt of the Hindustan Times. "You have to pay local salaries and local everything according to local conditions."
This is not going to make a dent in the U.S. unemployment rate; in fact it's liable to increase, not decrease, downward pressure on wages, as the consulting example shows.
But it's a sign that globalization is a whole lot more complicated than either its apostles or its fiercest opponents tend to admit.
— Richard Martin, Senior Editor, Unstrung