News

Western IT outsourcing at risk of attack

Karl Flinders

With all the major outsourcing providers having representation in India, today's terrorist attack in Mumbai is close to home for many businesses.

An estimated 100 people died in a terrorist attack in Mumbai, India, which is one of the most popular destinations for offshore IT outsourcing.

The Foreign Office advised against all non-essential travel to Mumbai until further notice.

Outsourcing suppliers such as Tata Consulting Services, WNS and Hexaware have headquarters in Mumbai itself. Many global corporations including, CA, BNP Parabis, JP Morgan and Novell have operations in Mumbai. Other Indian Cities, such as Bangalore have huge Western interests in the form of outsourced operations.

Offshoring growth

The growth of offshoring as a means of cutting costs associated with business processes and software development has led to India becoming a location for IT operations of large businesses.

Terrorists strive for maximum exposure for their attacks and attacking Western interests guarantees global media coverage. Al Qaeda's attack on the world trade centre in 2001 is a case in point. A terrorist organisation little known in the West became a household name.

Accenture has about 40,000 staff working in India with the majority in Bangalore.

Robert Morgan, director at Hamilton Bailey, which consults outsourcing suppliers, said Western interests are a natural target for terrorists.

"This could escalate and if terrorists want to be in the headlines they will attack Western interests," he added. "This is a danger in many outsourcing locations in the developing world and I do not see this particular incident affecting outsourcing business per se."

Alternative venues

If attacks in India continue to make headlines in the Western world businesses may consider alternative venues for outsourcing. These include near-shore locations such as Eastern Europe and onshore operations such as Scotland.

Andrew Rigby, a partner at law firm Brodies in Edinburgh, who set up a think tank attempting to develop Scotland as an outsourcing destination, known as the Outsourcing Hub Initiative, said security is always considered when businesses decide where to locate outsourced operations. "This includes disasters such as earthquakes and hurricanes as well as terrorist attacks," he said, adding that companies sending UK staff to these destinations will have to consider the risks because they will be responsible for them.

Business as usual?

Sourcing consultancy Equaterra does a lot of its business in India. The company said it is "naturally dismayed at the news of the attacks in Mumbai." But it does not think it will affect its business. "From the perspective of India as a leading outsourcing or offshoring destination, we do not believe that this will have a serious impact in terms of business continuity, and certainly as far as we are concerned it is business as usual.

Whether the activity will have a longer term impact on India as a business destination overall remains to be seen, but we will continue to monitor the situation," it said in a statement.

Duncan Aitchinson, head of Europe at TPI, said the security situation in India is unlikely to reduce the high demand for Indian outsourcing. "I think you would have to see a very significant level of unrest to see this change."

Mumbai coverage

Some companies with offices in Mumbai:

  • TCS
  • WNS
  • Wipro
  • Hexaware
  • HCL
  • 3i Infotech
  • Aptech
  • Atos Origin India Private
  • Blue Star Infotech
  • BNP Paribas India Solutions
  • CA Computer Associates India
  • Citigroup Information Technology Operations and Solutions
  • Godrej Infotech
  • JP Morgan Services India
  • Kensoft Infotech
  • Larsen & Toubro Infotech
  • MASTEK
  • Novell India
  • Patni Computer Systems
  • Siemens Information Systems
  • Syntel

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