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US retail giant Wal-Mart is planning to invest heavily in data and analytics technology and services at its Bangalore-based development centre.
The move reaffirms the growing importance of cities such as Bangalore in supporting the global delivery networks of big businesses.
In an interview with the India Times, Wal-Mart Stores CIO Karenann Terrell said the company’s operation in Bangalore, which has nearly 1,200 staff, will also look at disruptive technologies.
“The reason we’re seeing such explosive growth in India is because of the promise of Wal-Mart Technology being realised here. We’ve merged all those technology capabilities under one roof,” Terrell said.
She added that the Bangalore centre is becoming more important as it moves away from legacy systems, with more work done in “innovation centres”.
“Over time most of the new development work is being done through innovation centres, and Wal-Mart Technology Bangalore is a central figure.”
She said the Bangalore centre was next to San Bruno in California and Bentonville in Arkansas as the company’s most important. Wal-Mart spends about $1bn on IT each year and this sum is expected to grow as new retail technologies emerge. Security and cloud computing will also be areas that increase spending, said Terrell.
Talent and communities
Today sending work to places like India does not signal a cost-cutting strategy, or even outsourcing. Big businesses are setting up their own operations there to take advantage of a huge talent pool and to join communities comprising global technology companies, multinational businesses, investors and academics, all focused on IT advances.
For example, pharmaceuticals giant AstraZeneca is in the middle of a huge IT insourcing project, but it is also growing its workforce in India. It opened its own centre in Chennai to move from having 70% of IT outsourced to just 30%.
David Smoley, CIO at Astrazeneca, told Computer Weekly last year that the company’s decision to use offshore IT, but to bring it in-house through an Indian global delivery centre, helped motivate staff. “We are able to create a team that feels it is part of a company that is saving lives and creating drugs. We also see it as being important in career paths to give staff exposure to other parts of the company across the world,” he said.
Read more about global delivery
- The opening of an IT service centre in Chennai sees AstraZeneca launch a bold insourcing strategy.
- Technological development and the changing model for offshore business services and IT could threaten India’s dominance.
- With thousands of IT services contracts coming up for renewal, CIOs should take a careful look at where they source services.
Meanwhile German car manufacturer Daimler plans to achieve savings of €150m a year by bringing IT services in-house and expanding IT operations in India as well as Turkey.
Peter Schumacher, director at business consultancy The Value Leadership Group, said Bangalore, Gurgaon, Pune and Hyderabad are now the places to go for IT brains, experience and capital – as well as research and development.
To put this in context, he said the city of Bangalore receives more venture funding than the whole of Germany.
“These cities have become the largest, most diversified tech ecosystems in the world. Big banks, retailers and global tech firms all set up IT development operations there and there is cross-pollination.”
Terrell at Wal-Mart echoed this when answering a question about accessing the startup communities. “I think we're going to see talent migrate into and out of the startup community as well as the repatriation from other markets of Indians back home to help build that. That is going to be an important part of our strategy – maybe not in acquisition, but probably looking to innovation.”
India has once again topped a list of best places to offshore IT and business process outsourcing (BPO) services, according to the latest annual study from management consultancy AT Kearney.