Rise in anti-outsourcing attitudes prompt Indian BPOs to set up onshore facilities in US

In the wake of the recent drop in real estate costs and labor expenses as well as the growing reactions against outsourcing, major back-office processing companies in India are preparing to enhance their business activities in the United States. The Indian firms that have been conventionally pursuing the offshoring pattern are now needing to set up offices and enroll locals in inexpensive localities in the United States with a view to entice the clients who would be outsourcing for the first time and win projects in the very controlled segments.

Quoting company chiefs as well as industry experts, a report in a leading English business daily states that while the Indian companies enhance their onshore existence and pursue the IT services industry in employing local talent, their standard is set to change from a mainly offshore revenue pattern to an onsite-offshore pattern. This change in the business trend of the Indian IT firms seems to be happening more rapidly as the sophisticated IT industry comes under increasing criticism for not employing local talent in places like the United States and the UK. Acknowledging the changing trend in the BPO industry, the senior vice-president of Patni Computer Systems, Sanjiv Kapur said that henceforth depending on the expertise and expenses, approximately 15 to 20 per cent of the assignments will be executed in the clients’ local areas.

While many Indian IT firms initially considered the shift to be detrimental to their prospects, this view has changed following the opening of new prospects and now the BPO companies are beginning to see advantage in setting up onshore capabilities as well as employing local talent. Unlike the IT sector which only employs technical staff, the BPO companies have need of more assorted manpower. In addition, familiarity regarding local rules in a precise business or process is also useful in the BPO sector. To add to these, the relatively high rate of unemployment in the United States (lingering around 10 per cent) has also brought down labor costs and this has proved to be godsend for the Indian BPO industry opening facilities abroad and hiring local talent.

At the same time, the CEO of WNS Global Services, India’s second biggest exporter of BPO services, Keshav Murugesh points out that the cost of real estates too have declined by around 30 to 40 per cent in localities, such as Scottsdale in Arizona. In addition, several US cities, including Detroit, Memphis, Miami, Kankas and Omaha are presently offering sites to open new onsite service centers. Citing the example of Omaha, Murugesh says that this inexpensive location is home to numerous insurance firms having a number of universities – an ideal place to set up a new onsite facility.

In addition, industry experts are of the view that prospects materializing from the passing of the United States Health Care Bill will make it obligatory for classified data related to patient records to remain inside the country. In such cases, the BPO firms may face the risk of squandering new business opportunities if they do not have an onshore facility in the United States. According to industry experts, all the above mentioned reasons as well as the apprehensions in the United States regarding further joblessness owing to outsourcing are actually coercing the Indian IT firms to set up an increasing number of onshore facilities.