India: Toward High-End Outsourcing

by Dave

Vivek Wadhwa writing in BusinessWeek

Indian outsourcing industry has entered a new era of growth. Infosys (INFY), Satyam (SAY), HCL, and other IT outsourcing majors that once specialized in lower-value tasks such as application maintenance and business process outsourcing are seeing increasing success in providing outsourced high-value tasks such as total IT outsourcing, R&D, and business transformation services.

Here are six reasons why this is true.
1. Faced with high turnover, rising salaries, and a weak public education system, top Indian companies started investing heavily in workforce education and development.
2. Attrition rates have been remarkably low and are dropping.
3. Rising salaries in Indian IT shops are no longer a problem.
4. Faced with brutal cost-control pressures caused by the global economic downturn, many companies are more desperate to outsource than ever before.
5. There has always been a trickle of highly skilled [Indian] workers returning from the U.S. and Europe to their home countries for family reasons and because they felt homesick.
6. India has been dramatically increasing the output of its engineering colleges, and now quality is improving.

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