India Economy: Outsourcing Alive and Well

, Beijing, and Cebu City, Philippines, lead the list of emerging outsourcing cities. It has nine new entrants: Quezon City, Philippines; Toronto, Canada; Rio De Janeiro, Brazil; Mexico City, Mexico; Singapore; Chengdu, China; Guadalajara, Mexico, and Mandaluyong City, Philippines.

In the list of 50, 19 are Asian and 13 are Central and Eastern European, including Nizhniy Novgorod, Russia and Amman Jordan.

Global Services editor Ed Nair said, ‘The concept of an individual location being a ‘one-stop-shop’ has given way to ‘smart, multi, selective sourcing’ models, wherein selected processes are outsourced only to the most appropriate destination.”

This implies that companies look at what each city has to offer more than the country. Factors such as infrastructure, quality of life, and abilities of the workforce are key in choosing the city.

Bangalore, Shanghai, Krakow, and Makati City and are established finance and accounting cities while Pune, Colombo, and Cebu City are emerging locations in this field.

Some of the major firms outsourcing to India include Aviva, BT Group, Prudential, Standard Chartered Bank, Nokia, Siemens, UBS AG, Yahoo!, Tesco, Capital One, HSBC, Verizon, Dell, Nowrich Union, Cisco, Mercer, Delta Airlines, Alcoa, Barclays, Aetna, Motorola, and Experian.

Outsourcing in India began in the early 1980s when British Airways and American Express set up there. General Electric entered the market in the 90s based on the American Express model.

India is also attractive to hackers who need programs and spamming done anonymously and at a low price. In fact, criminals can even have the end-product delivered by Indian hackers.

“Phishers and spammers have supply chain managements too and there are clear prices for the services that each one provides and all these are beginning to show up now,” said Shantanu Ghosh, Vice-President, India Product Operations, Symantec Software India Pvt Ltd.

Bank account information, credit card numbers, email addresses, email passwords, eBay accounts, and more are for sale, and can go for up to $1,000.

According to Ghosh, India is among the top 10 nations from which spam originates. In fact, 80% of the mail in India is spam, while in 2001 only 8% was.

Indian IT firms generate more than a third of their income from the financial industry and the US makes up more than half their revenues. With this reliance on banking and the US it is still unclear how the recent US financial turmoil will affect outsourcing in India.

Charles Cole, EconomyWatch.com