IBM Corp's acquisition of an Indian outsourcing firm could trigger similar deals and strengthen the practice of "offshoring" white-collar work to India, industry experts said Thursday.
"We will see more such deals," said Pawan Kumar, who worked with IBM in 1996 to 2000, helping it establish outsourcing operations in India.
Scores of American firms have cut costs by farming out routine office jobs to India and other countries where wages are significantly lower.
The outsourcing practice has ignited the resentment of labor unions and politicians in the US, who criticize the loss of American jobs to cheap overseas labor. They say workers are made to pay with their livelihood for increased profits of corporations.
IBM announced last Wednesday that its subsidiary, IBM Business Consulting, would buy Daksh eServices, a back-office services firm with 6,000 employees.
The deal's expected to close next month.
The Wall Street Journal newspaper put the deal at between US$100 million and US$150 million. IBM India wouldn't discuss such details.
"Our shareholders expect us to tap opportunities in the developing world," IBM India spokeswoman Varsha Chainani said. "And we are aggressively expanding our reach in India."
Despite US criticisms of outsourcing, companies are showing an increased interest in using India as a base for outsourced operations, industry leaders said.
Many Indian outsourcing firms lack the funds to expand and are looking for investments from big players or venture capital funds. Some are also considering share offers to the public.
On the other hand, global giants such as IBM are looking to acquire several thousand low-paid employees in a short time to provide outsourcing services to their clients.
"This industry is investment hungry," said Raman Roy, an outsourcing veteran who sold his call center firm, Spectramind, for US$126 million to Indian technology firm Wipro last year.
"If [Indian] companies have aspirations and want to have a certain size, they have to look for deep pockets," Roy said.
The IBM acquisition has shown that US corporations are determined to outsource their operations to India and become service providers by setting up or acquiring Indian operations, Roy said.
"This shows that even global majors have to find a way to play in this market place," he said.
Kumar, now founder and chairman of Bangalore-based software firm VMoksha, said the price cited in the media reports suggested that Daksh had got a good deal, signaling India's growing status as an outsourcing provider.
"The price shows that confidence in India as a destination for outsourcing has gone up," Kumar said.
The deal has generated excitement in India, where information technology minister Arun Shourie and the main software trade body, National Association of Software and Service Companies, saw it as an affirmation of the outsourcing trend.
"It signifies the coming of age of India as the preferred destination for offshore services in terms of talent pool and infrastructure," the group said in a statement.
The Indian Express newspaper reported that Shourie said the deal was "great news for India," but also brought up the issue of the US backlash and India's dependence on the US in this field.
CREDIT-GRABBER: China said its coast guard rescued the crew of a fishing vessel that caught fire, who were actually rescued by a nearby Taiwanese boat and the CGA Maritime search and rescue operations do not have borders, and China should not use a shipwreck to infringe upon Taiwanese sovereignty, the Coast Guard Administration (CGA) said yesterday. The coast guard made the statement in response to the China Coast Guard (CCG) saying it saved a Taiwanese fishing boat. The Chuan Yu No. 6 (全漁6號), a fishing vessel registered in Keelung, on Thursday caught fire and sank in waters northeast of Diaoyutai Islands (釣魚台). The vessel left Keelung’s Badouzih Fishing Harbor (八斗子漁港) at 3:35pm on Sunday last week, with seven people on board — a 62-year-old Taiwanese captain surnamed Chang (張) and six
RISKY BUSINESS: The ‘incentives’ include initiatives that get suspended for no reason, creating uncertainty and resulting in considerable losses for Taiwanese, the MAC said China’s “incentives” failed to sway sentiment in Taiwan, as willingness to work in China hit a record low of 1.6 percent, a Ministry of Labor survey showed. The Directorate-General of Budget, Accounting and Statistics (DGBAS) also reported that the number of Taiwanese workers in China has nearly halved from a peak of 430,000 in 2012 to an estimated 231,000 in 2024. That marked a new low in the proportion of Taiwanese going abroad to work. The ministry’s annual survey on “Labor Life and Employment Status” includes questions respondents’ willingness to seek employment overseas. Willingness to work in China has steadily declined from
LEVERAGE: China did not ‘need to fire a shot’ to deny Taiwan airspace over Africa when it owns ‘half the continent’s debt,’ a US official said, calling it economic warfare The EU has raised concerns about overflight rights following the delay of President William Lai’s (賴清德) planned state visit to the Kingdom of Eswatini after three African nations denied overflight clearance for his charter at the last minute. Taiwanese allies Paraguay and Saint Kitts and Nevis, as well as several US lawmakers and the Inter-Parliamentary Alliance on China (IPAC) condemned China for allegedly pressuring the countries. Lai was scheduled to fly directly to Taiwan’s only African ally from yesterday to Sunday to celebrate the 40th anniversary of King Mswati III’s accession and his 58th birthday, but Seychelles, Mauritius and Madagascar suddenly revoked
The number of pet cats in Taiwan surpassed that of pet dogs for the first time last year, reaching 1,742,033, a 32.8 percent increase from 2023, the Ministry of Agriculture said yesterday, citing a survey. By contrast, the number of pet dogs declined slightly by 1.2 percent over the same period to 1,462,528, the ministry said. Despite the shift, households with dogs still slightly outnumber those with cats by 1.2 percent. However, while the number of households with multiple dogs has remained relatively stable, households keeping more than two cats have increased, contributing to the overall rise in the feline population. The trend
RSS