India Outsources its Outsourcing

By Anand Giridharadas, The New York Times. Posted September 25, 2007.

Thousands of Indians report to Infosys Technologies' campus here to learn the finer points of programming. Lately, though, packs of foreigners have been roaming the manicured lawns, too.

Many of them are recent American college graduates, and some have even turned down job offers from coveted employers like Google. Instead, they accepted a novel assignment from Infosys, the Indian technology giant: fly here for six months of training, then return home to work in the company's American back offices.

India is outsourcing outsourcing.

One of the constants of the global economy has been companies moving their tasks -- and jobs -- to India. But rising wages and a stronger currency here, demands for workers who speak languages other than English, and competition from countries looking to emulate India's success as a back office -- including China, Morocco and Mexico -- are challenging that model.

Many executives here acknowledge that outsourcing, having rained most heavily on India, will increasingly sprinkle tasks around the globe. Or, as Ashok Vemuri, an Infosys senior vice president, put it, the future of outsourcing is "to take the work from any part of the world and do it in any part of the world."

To fight on the shifting terrain, and to beat back emerging rivals, Indian companies are hiring workers and opening offices in developing countries themselves, before their clients do.

In May, Tata Consultancy Service, Infosys's Indian rival, announced a new back office in Guadalajara, Mexico; Tata already has 5,000 workers in Brazil, Chile and Uruguay. Cognizant Technology Solutions, with most of its operations in India, has now opened back offices in Phoenix and Shanghai.

Wipro, another Indian technology services company, has outsourcing offices in Canada, China, Portugal, Romania and Saudi Arabia, among other locations.

And last month, Wipro said it was opening a software development center in Atlanta that would hire 500 programmers in three years.

In a poetic reflection of outsourcing's new face, Wipro's chairman, Azim Premji, told Wall Street analysts this year that he was considering hubs in Idaho and Virginia, in addition to Georgia, to take advantage of American "states which are less developed." (India's per capita income is less than $1,000 a year.)

For its part, Infosys is building a whole archipelago of back offices -- in Mexico, the Czech Republic, Thailand and China, as well as low-cost regions of the United States.

The company seeks to become a global matchmaker for outsourcing: any time a company wants work done somewhere else, even just down the street, Infosys wants to get the call.

It is a peculiar ambition for a company that symbolizes the flow of tasks from the West to India.

Most of Infosys's 75,000 employees are Indians, in India. They account for most of the company's $3.1 billion in sales in the year that ended March 31, from work for clients like Bank of America and Goldman Sachs.

"India continues to be the No. 1 location for outsourcing," S. Gopalakrishnan, the company's chief executive, said in a telephone interview.

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