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What's next for India's outsourcing industry?

Stephanie Overby | Jan. 8, 2014 talked to Som Mittal, departing president of India's National Association of Software and Services Companies, about immigration policy and protectionist politics in the U.S., political and economic instability at home, and what the future holds for the Indian IT services industry.

The buyers are changing their approach as much as the solution providers. And the buyer is no longer just the CIO. As analytics have grown, we're seeing more business people making buying decisions. Technology is becoming so complex that companies find it difficult to do it all in-house so they're outsourcing more. There are certain areas that are core and need proximity and domain expertise, but the rest can be outsourced. And what is outsourced will get partially offshored. Firms like Infosys, TCS and Cognizant still based the majority of their staff in India. Are your major IT services firms in danger of falling into the same trap as the Japanese companies in the 1990s that failed to globalise their businesses?
Mittal: You have to look at the nature of our work and where we started. If you look at the large U.S. and European service providers like IBM, Cap Gemini and Accenture, they were entirely based in their home countries. Then they started to expand offshore in India and the Philippines and elsewhere.

Today, about 20 percent of the work from Indian service providers happens at the customer's site, and that is increasing. Most companies are setting up development centers in the U.S., the U.K., Latin America, and elsewhere so that they can be in the customer's time zone

Companies do struggle a bit in the U.S. because it's difficult to hire skilled IT workers. There are shortages as documented by U.S. Department of Labor numbers. That's the reason why companies like Microsoft and Oracle and financial service companies are expressing their need for more visas. What is NASSCOM's stand on the current U.S. visa situation and potential immigration reform?
Mittal: Over the last 10 years, U.S. attempts at visa reform haven't happened. The current immigration reform bills include many provisions that are positive such as increasing visa limits and green cards. Unfortunately, there are some very restrictive and discriminatory visa clauses in the U.S. Senate version of immigration reform.

Over the last several months, there has been increasing realization that those restrictions would harm U.S. businesses that need those highly skilled resources. The U.S. House of Representatives version does not contain such provisions. We are hopeful that in the coming year, when immigration reform comes back for discussion and debate, the positive provisions will remain and the negative provisions will be dropped.

The U.S. is a large market for us. Over the last four to five years during U.S. election cycles, we've seen American job loss being linked to our sector, which is odd. In reality, while jobs were disappearing in manufacturing and construction, they were being added in the tech space.


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