Indian outsourcer lures US workers

Cognizant Technology Solutions, the fastest-growing Indian offshore outsourcer, expects to hire another 1,300 people by the end...

Cognizant Technology Solutions, the fastest-growing Indian offshore outsourcer, expects to hire another 1,300 people by the end of the year. Although the bulk of those jobs will be in India, 300 to 400 of them will be in the US.

"We're recruiting like crazy, and we're starting to recruit in business and technology schools in the US," says Cognizant chief executive officer Kumar Mahadeva.  "We're doing more and more local hiring, particularly in senior-level positions."

Mahadeva agreed that the outsourcing industry was primed for consolidation.

"The top four to five players in India are all growing faster than the midtier players, whose revenues are flat. Most of the new business is going to the group of companies such as ours, Tata Consultancy Services, Infosys, Wipro. Yet there are still 300 small offshore companies in India," he said.

Analysts have pointed out that although global outsourcing may be a $550bn industry today, the top five players do not have even 20% of the market share.

"The Indian players only account for about $10bn of that amount, and it is a fragmented business. I think it will stay that way," said Mahadeva. "People are less inclined to make the megaoutsourcing deals anymore. They're breaking it up, maybe outsourcing desktops to EDS, integration to Accenture, software development to Cognizant, etc.

"At the same time, people are consolidating, shedding local contractors, trying to rationalise down from hundreds of smaller outsourcers to a more limited set of players," he added.

Cognizant's 60% growth rate is outstripping the 20% to 25% growth rate of its rivals. "We're growing faster because clients find we're successful at managing large programs. We can help with redeploying or retraining people and making sure the cost savings are coming through," said Mahadeva.

"We've spent a lot more in the US and Europe to provide consulting groups that can handle change management. We're also the top recruiter from the business schools [in India], and we have a huge number of MBAs."

Mahadeva appeared unconcerned about the US trend of risk mitigation, where firms often like to spread offshore development around with a variety of suppliers and locations. He did not believe that multisourcing could end up favouring the large companies with a bigger global reach, such as IBM.

"The big players really have little experience with offshore development, even in India," he said. "Accenture, for example, will point to having lots of locations, but they do local work with small local contractors. It's 'fly in and out' consulting. They're not used to doing global delivery."

As for security concerns with outsourcing, Mahadeva was reassuring.

"About half of our business comes from financial services, and they are the most sensitive of clients about data privacy. Another 20% of our clients are from healthcare companies.

"We are audited and certified to BS7799, the set of international regulations around physical and network security. Most clients will audit us for security and put in their own US standards.

"Some ask for a floor in a building, with only the people on their projects having access. The standards we enforce are just like those in the US," he said.

Maryfran Johnson writes for Computerworld

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