The recent news about TCS opening a 1000-seat centre in Ohio, US was the focus of a lot of attention - primarily because this showcases how an industry which is always seen as the reason for jobs moving away from US, is now creating jobs in US. This is a strategy which would be followed not only by TCS but also by other Indian IT giants such as Infosys and Wipro. Traditionally, the whole Indian IT services industry was built around the lower labour cost and the perfect time zone match between India and US that helps in round-the-clock development cycle.
So, how does such a move make sense?
- By moving the primary software development centre to the client's country, it becomes easier to interface with the clients. Under the existing scenario, most of the on-site work gets done with the vendor's employees working on the client site. This move will help vendor companies to build a critical mass of employees near client, which will make servicing the clients easier.
- Hiring local talent helps remove the headache of moving people from low-wage countries to on-site. With H1B visa restrictions, the extreme talent crunch faced in countries like India and the vanishing labour cost arbitrage, it makes better sense to bring in local talent. This also improves the companies' goodwill in the eyes of the US and other developed countries' public.
- The recession in US is forcing companies to cut their IT and Systems costs. Since IT doesn't form the core competency of any non-IT company, the best move for them is to outsource to the experts. For companies reluctant to let their data move out of their home country, a near-client facility would be the next best solution.
TCS Press Release
ET Article
2 comments:
"....improves the companies' goodwill in the eyes of the US and other developed countries' public."
I guess this is the only reason that pushed TCS to set up a center in US. And that too, in the time of election year. Otherwise, who will loose those extra bugs that would have been saved if the entire stuff is outsourced to India.
@Sai
A 1000 seat centre is quite a big investment for any company and there is a strong rationale behind this apart from earning a country's goodwill. This centre will probably act as an interface between the clients and the offshore centres.
The other point is, with the US economy down and the presence of quite a number of employable force coupled with a strong Rupee against Dollar makes this move very logical. Afterall, the best opportunity to easily get excellent, skilled workforce is when the economy is down!
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