India's outsource giants feeling the pinch

India's outsourcing giants are suffering sluggish growth in contrast to record-breaking spending on global services in 2008.

The country's big three outsourcers Infosys, Tata Consultancy Services, and Wipro experienced slow revenue or income growth in their just-announced quarterly results for the period that ended June 30.

The results fly in the face of figures in the quarterly index by outsourcing adviser TPI, which shows global spending on outsourcing is on track to break records in 2008, with Europe forging the biggest contracts.

All three of the Indian outsourcers blamed challenging global economic conditions, with Infosys warning the next quarter may continue to be difficult as companies postpone decisions on outsourcing.

Wipro experienced a rise in profits of 15 percent over the same period last year, growing to $187.5 million. Infosys reported revenue of $1.16 billion, up 24.5 percent over the same period last year. Tata's profit was up just 2 percent to $296 million.

Meanwhile TPI's index found that companies signed $25.6 billion worth of outsourcing contracts in the second quarter of 2008--the third quarter in a row to break the $20 billion mark and the best recorded performance of three consecutive quarters.

TPI says this year is on track to see the highest total contract value for outsourcing deals on record.

"Companies across industry segments are expressing their concerns regarding the uncertain business conditions by taking steps to reduce operational costs, and the outsourcing industry is benefiting," Peter Allen, partner and managing director of TPI, said in a statement.

Nick Heath of Silicon.com reported from London.

[SeizeCTRL]

Outsourcing, NAFTA and this whole free global trade is what's killing the US... we are no longer self sufficient... nearly everything we buy is made in China, most of our jobs are going to Indian and elsewhere... meanwhile, we allow illegal immigrants to just march across the border and work for peanuts.

At the same time, our youth become dumber and dumber as they turn into the lazy generation.

It's a shame that we will close a plant in the US just so some board of directors can fatten the wallets of the share holders by opening the same plant in China where they work for less than a dollar a day. What's going to happen when no one in the US can afford the products we once used to make because all our quality jobs are now over seas?

Look at our food scares, with killer tomatoes coming up from Mexico, deadly toothpaste, poisonous toys and other crap coming in from China. Our country is going down hill fast.

I don't feel sorry for anyone in India who feels the pinch.

[Penguinisto]

Proof positive that the whole outsourcing fad is beginning to fall flat on its face.

There are times and places where outsourcing makes perfect sense, and can provide a valuable adjunct to a company's goals. That said, there are very limited circumstances in which it would work... and companies in the US and EU are finally beginning to figure that out.

Nota Bene: if you're a US home user and you need tech support from Dell and HP, you'll get a free phone call to India. If you're a business customer, you get a tech in the US who answers your phone. Wanna know why? Because the OEM's truly value customers who buy computers in batches of 100 at a time, or have no problems with laying out $10k+ for high-end servers or disk arrays.

Proof? I can call Dell from work and get a guy in Oklahoma who hears me say "the disk is dead - I need another", and have it show up in my office 4 hours later. Total call wait time is 5 minutes maximum.

At home, I would call Dell, and promptly wait for 45 minutes minimum. Then I get a guy named "Steven" who speaks in a thick, barely-comprehensible Indian accent, demands that I follow a drop-stupid generic troubleshooting script, and finally decides that okay, the disk may be dead... so they'll send a pre-paid box, and maybe I'll have it all fixed and returned in two-to-three weeks.

The difference? At work, the dead disk came from a $4000 Multi-Terabyte SAS disk array latched onto $12k worth of server and accessories. At home, the computer was a second-hand Inspiron.

[whachau]

But many of the support folks who work for Dell in Oklahoma are also Indians. What's the difference
between an Indian from the US and an Indian from India. I guess the main issue is the 5 min to
45 min difference and it has nothing to do with offshore or not offshore. The world is getting
flatter and flatter. There is no clear definition of what US economy means. And other countries are
also suffering from the US subprime crisis. If offshore or onshore can make that job "better", it
will benefit everyone in the world in the long run. I believe Tata or Infosys are two of the biggest
buyers of hardware products from HP, IBM and Intel. If we have all the stat on the table, it is not
surprise to see that it is a win-win. I have a feeling that the current US economic crisis will not
be as worse as the big recession in the 30's. And it will be foreign capital that rescue the sinking
boat. For the benefits of global trade, offshoring and direct investments from foreigners, no one
wants to see a bad US economy. That is another indirect benefit of global trade. And it will be
a significant indirect benefit.

[whachau]

But many of the support folks who work for Dell in Oklahoma are also Indians. What's the difference
between an Indian from the US and an Indian from India. I guess the main issue is the 5 min to
45 min difference and it has nothing to do with offshore or not offshore. The world is getting
flatter and flatter. There is no clear definition of what US economy means. And other countries are
also suffering from the US subprime crisis. If offshore or onshore can make that job "better", it
will benefit everyone in the world in the long run. I believe Tata or Infosys are two of the biggest
buyers of hardware products from HP, IBM and Intel. If we have all the stat on the table, it is not
surprise to see that it is a win-win. I have a feeling that the current US economic crisis will not
be as worse as the big recession in the 30's. And it will be foreign capital that rescue the sinking
boat. For the benefits of global trade, offshoring and direct investments from foreigners, no one
wants to see a bad US economy. That is another indirect benefit of global trade. And it will be
a significant indirect benefit.

[SandFarmer]

It's obvious the backlash is finally taking its toll. Steve Job's was looking to open a huge call center and even took a highly advertised, rarely taken and negatively received trip to Bangalore. Soon after the **** hit the fan, all of a sudden the call center was off. All I hear when people start talking tech support is not that is was good or bad, but that is wasn't stateside and how difficult it was. I know the American public has long since gotten tired of being treat so shabbily by companies that outsource their tech support and also the scripts that they follow are just plain bad and we know those originate here. Talk about adding insult to injury.

I have long since found how to get to U.S. support with all the tech services that outsourced that I call and have told everyone I know how to. Which usually consists of politely asking for "American Tech Support". Sometimes screaming is necessary, but rarely. Also we're seeing more companies tout that they have stateside TS as an attraction. So as far I see it, it's obvious that we're tired of outsourcing and these companies are finally getting the clue. This proclamation of a bad quarter due an economic downturn is only partially true. And that part is that business has dropped off for those that are outsourcing and they in turn are pulling back on using their services. Good show. And a lot of companies are learning the hard way that Indian law is not conducive to their "better business". The rest is just crap. Just as they try to sugar coat your problems, they are sugar coating the truth. Matter of fact, just plain lying to make them not look as bad as they have made themselves look. Well ya only look as good as you sound and I can't understand a word you're saying.

[SandFarmer]

It's obvious the backlash is finally taking its toll. Steve Job's was looking to open a huge call center and even took a highly advertised, rarely taken and negatively received trip to Bangalore. Soon after the **** hit the fan, all of a sudden the call center was off. All I hear when people start talking tech support is not that is was good or bad, but that is wasn't stateside and how difficult it was. I know the American public has long since gotten tired of being treat so shabbily by companies that outsource their tech support and also the scripts that they follow are just plain bad and we know those originate here. Talk about adding insult to injury.

I have long since found how to get to U.S. support with all the tech services that outsourced that I call and have told everyone I know how to. Which usually consists of politely asking for "American Tech Support". Sometimes screaming is necessary, but rarely. Also we're seeing more companies tout that they have stateside TS as an attraction. So as far I see it, it's obvious that we're tired of outsourcing and these companies are finally getting the clue. This proclamation of a bad quarter due an economic downturn is only partially true. And that part is that business has dropped off for those that are outsourcing and they in turn are pulling back on using their services. Good show. And a lot of companies are learning the hard way that Indian law is not conducive to their "better business". The rest is just crap. Just as they try to sugar coat your problems, they are sugar coating the truth. Matter of fact, just plain lying to make them not look as bad as they have made themselves look. Well ya only look as good as you sound and I can't understand a word you're saying.

[bmorrow492]

After terrible experiences trying to get warranty service on computers from Dell and Compaq, I will never buy a computer again from a company with outsourced service.
Bill Morrow

[bmorrow492]

After terrible experiences trying to get warranty service on computers from Dell and Compaq, I will never buy a computer again from a company with outsourced service.
Bill Morrow
P.S. The reason has nothing to do with the nationality of the people I talked to. After more than ten hours on the phone listening to the same script being read over and over, I finally, in frustration, took my in-warranty Presario to a local shop for repair.

[cohaver]

Oil no mater the place were all going feel the pinch Labor cost is so 20 century only those counties that become energy independent will survive in the 21 century

[nicholasbray]

US Dollar is low. They will feel the pinch. US labor starts to seem more cost effective.

[akluj]

You always get what you pay for.

[inachu]

Outsourcing, NAFTA and this whole free global trade is what's killing the US.
---------------------------------------------------------------------------------------------------------

I agree 100%
Used to be companies would hire H1B for certain tasks but now companies are hiring for their entire bottom line. I know one multi-million dollar USA company on the east coast that has more Indian workers than they do american workers.

This is plainly abuse.

[sundeeps]

You should see things in totality. Where were you guys when lot of people were loosing jobs due to uncle sam's policies ? Lot of people in Asia/ Africa are impacted due to selfish US policies? Look at Iraq/ Afganistan. When the rich American companies were sucking money out of poor countries and filling up the pockets of Americans.. it was just Business as usual. However, when the same American corporates went to outsoure jibs to make more money. it becomes a problem funny isn't it ?

Anyways, leave the political things as it is the fact is that Talent speaks for itself. Someone in the post mentioned about the lazy US generation and i think that is the key. India/ China and other such countries are getting the work coz they really are not affraid of working hard. People in India china bill for 8 hours but work for 14 hiurs without asking for overtime.. also the amount of work that they can finish in 8 hours is much higher.

[Thomas, David]

Simply proof positive why doing things right has nothing to do with a dollar sign.

Global cool-down? Try U.S cool-down, that is where their money came from.

[esackley]

You know, there was probably a time when consumers in India relied upon call centers in the U.S. for support. I frankly don't mind where my call is taken as long as the person at the other end has the training and decision-making skills for good customer service. Let's be fair . . . we've all had horrible cutomer service on the phone and in person right in the good ole US of A. My most recent experience was with SlingMedia. My SlingBox Pro was no longer hooking to my in home network, I completed all diagnostic steps as outlined on their website and called customer service for further assistance. Since I'd already completed the preliminary steps, the call went very smoothly and the rep made the decision to ship a replacement unit at no charge with pre-paid return. I got the unit in two days. Great customer service, I am a very happy customer and the call center representative was sitting in Costa Rica. I'm very happy to have had him as my resource that evening.

[bernarusan]

You are showing deep ignorance for the historical reasons for NAFTA and free commerce. It was invented by the US and the European countries mainly, because they wanted to unload the excess production on other countries (Opium Wars, and other less nefast endeavors). Now that many of those countries have responded and start doing commerce back, there are people like yourself who want out of "free global trade". Please note that the wealth of the USA and other countries was done forcing this free global trade on others. now the tide is turning on you, but in the long term it will even out for everybody. So please hold tight as many of have done for centuries.

[lcarliner]

Tata Consultancy needs to be prosecuted under the RICO law, as well as one of its client, Nielsen Media for LYING on their H1-B visa application request. The fact that U.S. workers who are being displaced by H1-B workers from Tata Consultancy are REQUIRED to train their replacements as a condition of receiving severance benefits should be considered to Prima Facia evidence for buklding the case! This requirement is as morally repugnant as the Nazi requiring concentration camp victims to dig their own graves! If the primary rationale for being granted an H1-B visa slot is that the company claims lack of suitable professionals, then why do workers who are being let go need to train their replacements?

[long_ways_from_home]

The Global Free Trade is exactly why the US is still going as strong as it is. I can understand why people are upset when they call an oursourced call center and get someone who can't speak "American" English. But to say global free trade is a problem is just to not understand the issues.

As an American that lives in Singapore, I see things very differently. First of all, just take a look at countries that don't have free trade (Burma & N Korea come to mind) vs. those that do (Singapore & S. Korea). The more free, the more affluent. Without exception (that I know of).

The other thing people forget about "made in China" is that not everything is going back to the US. So, when I buy a pair of Nikes here in Singapore, they were made here in Asia, but almost all the profit goes back to the US. Yes, made here in China, distributed here by a Malay, sold here to a Singaporean... but profits back to US. Same with Coke, McDonalds, Intel, Microsoft, Apple, etc,etc,etc... If you really think the US is the only market and free trade is a bad thing, remember we are only 5% of the words population controlling nearly all the world's brands (and thus profits).

And the comment about "lazy generation" is just crap. While I'm sure there are lazy people in every generation, just look how many people attend college today vs 40 years ago. Or what subjects are being taught in HS (things like Calculus come to mind). Spend a week in Silicon Valley seeing kids in their 20s working 80+ hour work weeks creating the next "google" and you will by sorry for making such a comment.

[jjcompliant]

david thomas what you do not understand that its about the top dollar for their boards american corporation go to india and other countries and they hire cheap labor and hire speech therapist to teach these non american outsource employees they teach them how to speak english, give then american names for the sole purpose of decieving he american consumers who needs teck help and have bought their product in good faith and sometimes we receive good help and sometine not but the bigger problem is that these foreign nationals have our private information, social, address, and they can sell your private information globally too so it is not a win win situation guess what identity thief enforcement is not a golbal you barely can get a police report in the us as this is not the number crime to be inforced

[rocket999]

I don't blame the "fat cats" for the situation we're in. Everyone is entitled to make a buck, including you and me. The problem is that we want LCD TV's for $900, DVD players for $25 and with unions in the US, they just can't manufacture these things here. Do you want to pay $4,000 for the same TV that sells for $800 elsewhere? Of course not, but that's what it would take to get the jobs back here.

As far as outsourcing development, I'm opposed to that, not just for the job loss, but the quality that comes back. I've been forced to deal with outsourcing several times and it is always a disaster and costs more than doing it face to face here in the states. The hourly rates may be higher here, but the job gets done in much less time.

This weekend I saw that Gateway computers now proudly announces on its home page that tech support is right here in the USA and not overseas. After struggles with Dell, Symantec & others lately, my next PC will be from them.