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.
A magnitude 7.8 earthquake struck off the southern coast of Mindanao in the Philippines at 7:38am today, prompting the US Tsunami Warning System to issue an alert for neighboring countries, including Taiwan. The system issued a purple alert indicating a "tsunami threat." The potential threat zone includes Taiwan, the Philippines, Papua New Guinea, Yap and Palau. Philippine authorities were assessing the damage from the quake, with the office of civil defense seeking to verifying initial reports that 15 people had been killed and 129 injured in the region, mostly from falling debris. Arlene Hollero, disaster chief of Maasim town in the Philippines' Sarangani Province,
RESILIENCE: Taiwan plays a key role in semiconductors, energy, information infrastructure and advanced manufacturing, AIT Director Raymond Greene said Taiwan’s continued investment in deterrence and resilience remains vital, especially in uncrewed systems and other emerging technologies, American Institute in Taiwan (AIT) Director Raymond Greene said yesterday. Greene made the remarks at the annual National Strategic Summit on Supply Chain Resilience held by the Research Institute for Democracy, Society and Emerging Technology (DSET), a government-backed think tank. As Taiwan last year became the US’ fourth-largest trading partner and supply chain security is becoming more important, cooperation in emerging technologies continues to deepen between the two countries, he said. The US is committed to accelerating innovation, building key infrastructure, strengthening cooperation
The National Chungshan Institute of Science and Technology yesterday showcased its locally developed variants of the Vision 60 robotic patrol dog, which it plans to deploy on the nation’s outlying territories in the South China Sea. The variants were produced under the Joint Lab project — created by the institute and domestic companies — and assembled with domestically produced motors, lenses and artificial intelligence (AI) systems alongside licensed tech from the US, Missile and Rocket Systems Research Division deputy director Jen Kuo-kang (任國光) told the media event at a military base in Taipei’s Dazhi (大直) area. Taiwan has built up its strengths
RIGHT DIRECTION: Taiwan’s efforts to prevent forced labor include a proposal to ‘fully prohibit’ employers from withholding workers’ documents, an official said Taiwan is to establish a mechanism to restrict imports of goods linked to forced labor, the Executive Yuan said yesterday, after the US proposed imposing additional tariffs on Taiwanese goods over labor concerns. “The Ministry of Labor and the Ministry of Economic Affairs are to establish an interministerial review procedure,” Executive Yuan spokesperson Michelle Lee (李慧芝) said at a news briefing in Taipei. “The government is to use the Foreign Trade Act [貿易法] as the legal basis to restrict imports of goods produced with forced labor” and bring its supply chain governance more in line with international standards on human rights, resilience
RSS