Offshore account

Inside the vast glass and steel campuses that line the high-tech highways of Chennai, Hyderabad and Bangalore are the technology ‘divisions’ of some of the world’s best-known companies. The secured doors to rooms holding between 50 and 200 software developers, helpdesk staff or business process specialists, most in their mid-20s, bear the corporate branding of investment banks, airlines, telecoms giants and any number of other MNCs (multinational corporations, as they are known in India). Most – especially US companies – force a veto on the disclosure of their presence.

Reuters is a rare exception: it is proud of what it has achieved by going offshore. On his quarterly visits to the Reuters’ Development Centre in Hyderabad, a facility owned and run by India’s fourth largest IT services company, Satyam Computer Services, David Lister, Reuters’ CIO, is – like everyone else – driven through chaotic, gridlocked traffic, passed shacks with neither power nor running water and home to people living below India’s $2-$3 a day average income.

His group – 262 in Hyderabad and 32 at various Reuters locations around the world – are largely Satyam employees, but the strength of the partnership is such that they are regarded as Reuters’ team  – except that Lister is saving at least 30% and securing a higher quality of staff by sourcing them through India.

This month’s special focus on India puts the global delivery model for IT services under the microscope, looking at how it has evolved beyond simply labour arbitrage and assessing the strengths and weaknesses of the top 20 companies using India as a pool of highly skilled, low-cost talent. It looks at the strains on the model – high attrition, wage inflation and the overtaxed public infrastructure – and examines the  bold attempts by Western IT services companies to build momentum in India and beat their local rivals at the local game.

One theme that emerges is that Indian companies are rapidly being accepted as strategic partners by many US and European organisations, partnerships that are “theirs to lose”, to quote the global head of innovation at GlaxoSmithKline.

And the cementing of those partnerships takes many forms. A short distance from the Reuters’ Development Centre – but a hour’s drive – is Satyam’s global HQ. Next to the company founder’s private zoo, David Lister has a tree planted in his honour (as have Bill Gates, DNA pioneer James Watson and various Nobel prize winners).  Is that a permanent fixture  or one that will be removed if Reuters decides in the future to change its primary offshore supplier? After six years of partnership, Satyam won’t even contemplate the possibility.

Pete Swabey

Pete Swabey

Pete was Editor of Information Age and head of technology research for Vitesse Media plc from 2005 to 2013, before moving on to be Senior Editor and then Editorial Director at The Economist Intelligence...

Related Topics