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.
AIR SUPPORT: The Ministry of National Defense thanked the US for the delivery, adding that it was an indicator of the White House’s commitment to the Taiwan Relations Act Deputy Minister of National Defense Po Horng-huei (柏鴻輝) and Representative to the US Alexander Yui on Friday attended a delivery ceremony for the first of Taiwan’s long-awaited 66 F-16C/D Block 70 jets at a Lockheed Martin Corp factory in Greenville, South Carolina. “We are so proud to be the global home of the F-16 and to support Taiwan’s air defense capabilities,” US Representative William Timmons wrote on X, alongside a photograph of Taiwanese and US officials at the event. The F-16C/D Block 70 jets Taiwan ordered have the same capabilities as aircraft that had been upgraded to F-16Vs. The batch of Lockheed Martin
GRIDLOCK: The National Fire Agency’s Special Search and Rescue team is on standby to travel to the countries to help out with the rescue effort A powerful earthquake rocked Myanmar and neighboring Thailand yesterday, killing at least three people in Bangkok and burying dozens when a high-rise building under construction collapsed. Footage shared on social media from Myanmar’s second-largest city showed widespread destruction, raising fears that many were trapped under the rubble or killed. The magnitude 7.7 earthquake, with an epicenter near Mandalay in Myanmar, struck at midday and was followed by a strong magnitude 6.4 aftershock. The extent of death, injury and destruction — especially in Myanmar, which is embroiled in a civil war and where information is tightly controlled at the best of times —
Taiwan was ranked the fourth-safest country in the world with a score of 82.9, trailing only Andorra, the United Arab Emirates and Qatar in Numbeo’s Safety Index by Country report. Taiwan’s score improved by 0.1 points compared with last year’s mid-year report, which had Taiwan fourth with a score of 82.8. However, both scores were lower than in last year’s first review, when Taiwan scored 83.3, and are a long way from when Taiwan was named the second-safest country in the world in 2021, scoring 84.8. Taiwan ranked higher than Singapore in ninth with a score of 77.4 and Japan in 10th with
SECURITY RISK: If there is a conflict between China and Taiwan, ‘there would likely be significant consequences to global economic and security interests,’ it said China remains the top military and cyber threat to the US and continues to make progress on capabilities to seize Taiwan, a report by US intelligence agencies said on Tuesday. The report provides an overview of the “collective insights” of top US intelligence agencies about the security threats to the US posed by foreign nations and criminal organizations. In its Annual Threat Assessment, the agencies divided threats facing the US into two broad categories, “nonstate transnational criminals and terrorists” and “major state actors,” with China, Russia, Iran and North Korea named. Of those countries, “China presents the most comprehensive and robust military threat
RSS