Dilawar
http://www.epw.in/editorials/flattening-world-or-falling-flat.html
The rhetoric during the boom years was about “moving up the value chain” from simple outsourcing, but, sadly, this has remained a mere aspiration. At the lower end, automation is now doing much of the work of the call-centre employees, and a lot cheaper. But more importantly, the large western software services transnational corporations (TNCs) like IBM, Capgemini, Accenture and EDS have rapidly moved in to successfully emulate the cost-arbitrage business model pioneered by TCS, Infosys, Wipro and HCL Technologies. What the Indian IT-ITeS industry is witnessing is the advance of the large software services TNCs into the market niches where the Indian majors have established themselves based on the cost-arbitrage business model. IBM’s acquisition some years ago of Daksh, one of India’s notable BPO providers, comes to mind. IBM has even been able to bag a major domestic deal with India’s largest telecommunications company, Bharti, awarding the firm a contract to run its IT services and a lot of its business processes.
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Presently, the India’s IT majors seem to be focusing on foreign direct investment abroad in the form of acquisitions in the major export markets and the setting up of delivery centres in other emerging markets. Government policy also perhaps needs to provide greater incentives to make inroads into export markets other than the Triad. Additionally, given the cost advantage that the Indian majors have, domestic demand, including government procurement, needs to be given greater weight at this point in time when the markets of the Triad are faltering.
Will the Indian IT-ITeS industry with its significant export orientation – spearheaded, until now, by nationally-owned firms – move up the value chain or will it remain at the lower end of the market and emerge as the back office of the world through the agency of the captives?