Offshore Outsourcing makes job market tick

Is the job market finally thawing? Benched Employees = Benched Employment ITES is not IT Offshore Outsourcing makes job market tick US economy recovers but does not sizzle

he slowdown in the US has underscored India's advantage as a quality code churner. Stung by high costs of labour that consitutes 75 per cent of costs of developing software and a desperate need to cut costs and speed time to market in a harsh competitive environment, US companies are shifting base to India to leverage its high quality low cost advantage. A 100-man facility can save IT companies $7-15 million in a year, according to a recent McKinsey report. In 2000-2002 Indian MNCs contributed 15 per cent to India's software exports. A clear evidence of the increase interest in India is that 60 per cent per cent of the 110 units registered with STPI Bangalore in 2001-02 were foreign equity companies. In April-May 19 new units were registered, compared to 110 last year. In its February edition of Tattler, AssureConsulting,com had listed twenty companies who shifted operations to India in January. In the last one month alone, marquee names such as Fiat Software, Snecma Moteours and ADC announced their decision to set up development centres in India.

India's large graduate pool- over 120,000 trained IT professionals are added to the Indian talent pool yearly compared to 25,000 in the US; 62 per cent of the workforce has more than four years of experience and over 70 per cent has an engineering degree, have contributed to the bullishness over India. Top US companies such as GE, Cypress, Cadence, 3Comm SAP, Computer Associates, Microsoft and Intel are now aggressively scaling existing operations in India. Interestingly, despite announcements from most large MNCs of significant layoffs in their international development centres, Indian work force has doubled in its capacity. Two years ago, SAP's Bangalore center, for instance, accounted for a mere one per cent of total development spend. Today, this center accounts for over eight per cent of development spend and is projected to grow to 15 per cent in the next two years. The company has now announced plans to invest 23 million Euros in India, Microsoft plans to hire 300 people on board by next year from current headcount of 125 and plans to invest $500 million in a couple of years. To boost its talent hunting efforts Microsoft recently launched a .Net pet shop to woo developers. The net Pet shop is a prototypical web site that's 28 times faster and supports 7.6 times the User load as the Java Pet store yet needs one fourth of the total code and one-sixth of the CPU resources. Oracle similarly plans to triple its staff strength in about 12 months and is opening a new centre in Hyderabad. GE Intel, Cadence and Texas Instruments are hiring at an accelerated pace.

The revival in the job market is thus being driven by global IT majors who are either setting up independent ODCs or expanding existing facilities. Over a period of time, established MNCs have ceased to view India as low cost support destination and are development work outsourced to its Indian facilities. For example, Motorola has moved its entire product development to India, and even part of product management and specifications development has been shifted. Baan used its Indian ODC to manage over 40 per cent of Baan 5 development. Fourteen per cent of Novell's worldwide R&D is carried out in India and there are plans to increase this figure to 20 percent in the next 2-3 years. Adobe has located 8 per cent of its worldwide development resources in India with plans to increase this to 20 per cent over the next two years. Over the next two years, US-based Cypress Semiconductor, which makes logic and memory, chips, with primary focus on telecoms and network gear makers will shore its Indian investment to $15m. After upping the investment, the India facility will be Cypress' biggest development centre worldwide and will staff 300 engineers. Finally, companies like GE are looking at India for fundamental research and new concept/product development.

Companies are hence scouting for professional working in high-end domains possessing the experience label. This means big titans will welcome professionals with minimum three plus year's experience in a particular domain. Yes, the job market is beginning to tick but for professionals possessing three-five years experience.

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