Microsoft and HP step up Indian outsourcing

Microsoft and Hewlett-Packard are expanding their outsourcing operations in India.

Microsoft and Hewlett-Packard are expanding their outsourcing operations in India.

Microsoft is increasing the number of staff at its software development centre in Hyderabad from 200 to about 500 employees by 2005.

This year the company is also increasing the headcount at another centre in Hyderabad that handles application development for Microsoft's in-house IT requirements. This centre already employs about 125 staff.

Details of the number of staff being added this year were not available from Microsoft, although it is likely to be another 125, according to sources.

"We are taking both these operations and combining them at a single facility," said the spokeswoman, who declined to be named.

Microsoft announced last year that it had entered into a Memorandum of Understanding with the government of the state of Andhra Pradesh to acquire 42.5 acres of land for a facility. Construction of the facility in Manikonda is scheduled to be completed by the end of this year.

The news sparked protest from the Seattle-based Washington Alliance of Technology Workers.

"Microsoft expanding in India means that workers in Redmond will face direct competition from workers that make a fraction of their wages," said Marcus Courtney, president of WashTech. 

"This will only lower wages and benefits for Microsoft US-based employees. The work that Microsoft is getting done in R&D in India can be done in this country."  

Microsoft, however, counters that Redmond will continue to be its development hub. "Ours is a centralised development model, and we don't see the staff in India growing into thousands," the spokeswoman said.

"While we do not yet understand how large our presence will be in the future, it made good business sense to buy this parcel now should we need it in the future."

Microsoft has also set up a support centre in Bangalore, which offers voice and e-mail based tech support to Microsoft customers worldwide.

"We have this strategy to follow the sun to offer round-the-clock support, and hence a support centre in India made sense,"  the spokeswoman said. The center employs about 250 staff, and Microsoft does not have any immediate plans to increase the number of staff there.

Microsoft also outsources software development and some tech support and call centre work to Indian companies. Microsoft's own operations and partners together account for about 900 to 1,000 staffers, but the numbers at contractors' facilities could be far more than the company reports, and run into thousands, according to Courtney. Outsourcing companies doing work for Microsoft are tied in by nondisclosure agreements.
    
Microsoft's Hyderabad software development centre, which opened in 1998, has created a number of technologies and products, including Services for Unix, which enables customers to integrate Windows into their Unix environments, and Visual J#.net, a Java language development environment for targeting the .net platform.

Meanwhile, HP, which has handled a large chunk of its own global accounting functions from a subsidiary in Bangalore for more than three years, is now offering similar back-office services from India to its customers.

"Having gained the confidence that we can do this out of India, we are extending these accounting services to our clients," said a senior HP official in India, who spoke on condition of anonymity.

To begin with, HP is setting up a back-office accounts processing facility in Bangalore for Procter & Gamble. It was unclear how many staff will work at the P&G facility or exactly which accounts functions will be handled.

HP has offered some of the staff working in its own accounting operations the opportunity to work at the P&G facility, the sources said.

HP said in March that it had agreed in principle to outsource P&G's worldwide transactional accounts payable operations to HP Services, although it did not say at the time where the work would be done.

P&G is the largest household products company in the world, operating in markets such as foods, beverages, personal care, laundry and cleaning.

HP is creating a team of language experts at its back-office facilities in Bangalore to process accounts from non-English speaking countries. The operation already handles some of HP's accounts in other languages, including Spanish.

John Ribeiro writes for IDG News Service

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