Are Indian Companies Expanding Too Quickly?

A recent NY Times article highlights the outsourcing methodology. The article is by Anand Giridharadas and titled Outsourcing Works, So India is Exporting Jobs.The premise is that the main consultant companies in India, Infosys and Wipro for example, are buying offices in other lesser developed countries or areas and training those that live there to do the jobs that can be outsourced there. The article marvels at how an American company can bring in Infosys to help with a Hispanic program with the rational being that Infosys can hire Mexican workers to write the program and understand the cultural nuances.

But what I am seeing are companies that are expanding too quickly. Not just in location but in ideology. Much of the reason for India being a popular place for outsourcing is the years it took to build a remarkable educational system. Now that the outsourcing proceeds are raising work rates in India, finding a cheaper alternative is paramount to continue to offer the service at the price outsourcers are comfortable with. So by expanding to other nations, the Indian companies are losing the educational experience that their current workforce has as a foundation. Expanding to Mexico and other areas and offering a training program is not the same thing.

So what do I expect from this? I expect to see this trend continue for another couple of years with more articles praising the idea. But then I expect to see a little backlash. This backlash I expect to come from the newly developed countries. I expect them to take the education and find that they are not as empowered as they believed they would be. I expect that service levels will decline. I expect to find a company like IBM buy these satellite trained offices on the cheap and educate the workers even more. That is when I think this idea will really take off.

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