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The creation of outsourcing facilities closer to home doesnt mean U.S. companies will stop sending work overseas to India. More likely, U.S. clients will engage in blended contracts in which the customerfacing processes or services are outsourced to a nearshore location while backoffice functions continue to be sent to India facilities.
As stories circulate about the cultural barriers U.S. companies hit when outsourcing.T. to locations in India, offshore service providers are moving some operations back into the United States an effort they hope will increase their appeal to U.S. companies.
Indian service providers, once considered the darlings of the outsourcing industry, today face challenges causing U.S. clients to question the benefit of sending work overseas. Also, as the value of the U.S. dollar drops in relation to the Indian rupee, some offshore providers feel compelled to raise prices, which negates the cost savings U.S. companies expect when offshoring I.T. work to India. And if smaller Indiabased offshore providers hope to compete with the IBM Global Services and Accentures of the industry, they must build global service delivery centers and expand their reach beyond their own geographic region.
While it is less expensive than operating solely in the U.S., the cost of doing business in India has become more onerous because the demand for talent there is so high now that workers want more money and staff turnover has increased, says Mindy Blodgett, research analyst at Yankee Group. It is also better public relations for a U.S. company to be able to say, We are outsourcing, but not offshoring.
For instance, security appliance maker WatchGuard terminated its offshore contract for services in India with an unnamed provider due to staff attrition and customer service complaints. At the time WatchGuard Director of Global Technical Services Bill Foreman reported that frequent customer complaints drove the decision to move the staff located in India to another location, potentially stateside.
Foreman attributed the problems he experienced with high staff turnover as well as an increase in jobs for Indian workers at U.S.based companies such as IBM. The attrition there was uncontrollable and we also had issues with the quality of staff available to us. Add onto that customer complaints and language barriers and the situation becomes a time and resources drain, he said.
Despite the cost increase WatchGuard will inevitably incur by locating those positions back in the United States , Foreman said the company and its customers will benefit longterm. We want to maintain our customer loyalty. The India support is not what our customers have come to expect for missioncritical equipment, Foreman said.
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