In India, Global Crisis Is Not All Bad News

by Dave

About 60 percent of India’s outsourcing business comes from the United States, and 40 percent of the work is in the banking, insurance and financial services sectors.

“We now have to look at other regions of the world, like Japan, the Middle East and the Nordic countries,” said Som Mittal, president of the National Association of Software and Services Companies, or Nasscom. “The current crisis has sharpened our realization that we cannot put all our eggs in the U.S. basket.”

Perhaps the biggest and most sustaining change has been its climb up the value chain of services in recent years — from back-office support functions to what the industry calls “knowledge process outsourcing,” which includes legal services, hardware network management and engineering design.

One of the country’s biggest technology companies, Bangalore-based Infosys, has been making a deliberate effort to scale back assembly-line software development and ramp up more technically complex services such as engineering design.

“It is a strategic shift we began making some years ago,” said S. Gopalakrishnan, the company’s chief executive officer. “Our efforts to expand our services to include high-end consulting, systems management and product engineering and design work may help weather the storm.”

Infosys’s fastest-growing business is in product and machine design for American aerospace, automobile and construction firms, but the company has also set up consulting businesses in China, the Middle East and Mexico.

Meanwhile, the legal services branch of India’s outsourcing industry is experiencing a boost as a direct result of the global crisis, as bankruptcies, mergers and acquisitions proliferate and demand grows for help with litigation.