Is It Beginning of the End of IT Outsourcing?


Is the IT outsourcing Era coming to an End?

  • Yes

    Votes: 6 33.3%
  • NO

    Votes: 12 66.7%

  • Total voters
    18
Thread Starter #1
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For years now, American corporations have been outsourcing IT services, creating hundreds of thousands of jobs for technology workers in India and elsewhere. General Motors, for instance, now outsources about 90% of its IT services, handling just 10% in house.

But GM is planning a remarkable change in direction. As Reuters reports, Chief Information Officer Randy Mott told the company’s IT employees last month that the company plans to reverse the trend. GM plans to at least double the number the number of in-house IT staff over the next three years. The plan is to shift the IT budget over the next 3-5 years from 90% outsourced to 90% in house. GM said it palns to hire thousands of software developers, database experts and others.

Of course, lots of companies stand to lose if GM triggers a shift in the conventional wisdom, and everyone decides that outsourcing is now a bad idea. Among the vulnerable to such a plan are the whole Indian IT industry, as well as U.S. tech giants like HP, Dell, IBM and Xerox, all of which have jumped headlong into the IT services business in recent years.

Mott says the goal is to make GM more efficient and more productive.

Among other things, the company plans to shift from 23 data centers down to just two, both in Michigan. The company also intends to expand recruiting efforts for new college grads.

The shift in policy at GM could be particularly bad news for Hewlett-Packard, which signed a $2 billion multi-year outsourcing deal with GM in July 2010. Note that HP’s relationship with GM stems from its 2008 acquisition of Electronic Data Systems, a former GM unit. GM bought EDS from Ross Perot in 1984, then spun it off 12 years later.

Will GM's Move Mark An End To The IT Outsourcing Era?
 
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Re: Is this the Beginning of End to IT outsourcing?

Well, Indian companies itself should stop relying only on outsourcing.

India is still a developing nation and there is lotz of projects in India that these IT companies should target. But the main root cause is Corruption. Until this corruption is not vanished, India cannot move a step ahead to create a great IT infrastructure. Till then IT companies have to rely on companies abroad for their bread & butter.

For eg. If we take Adhar project, great Inititative. Indian IT company got the project which was not outsourced by company abroad. But now what? Where is Adhar card? What happened to the project? It's been over a year I registered for Adha and haven't yet received the card. [frustration]
 
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Re: Is this the Beginning of End to IT outsourcing?

Correct visran. The problem is with,

1. Lack of strategic goals in overall Indian business scenario
2. Costs are rising continuously
3. Every engineer trying to come to IT whether its of his/her aptitude or not
4. Quantity available but not quality professional.

Due to these factors, many IT giants are shifting east or increasing staff onshore. We should not be dependent on MNC's henceforth.
 
Thread Starter #4
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Re: Is this the Beginning of End to IT outsourcing?

Moreover thanks to the economy slowing down in Europe the cost of labour is coming down as well in most of the developed nation's, cost was the main advantage which we held but over a period of time we are loosing that advantage as well, and who can forget China who is slowly shoring up the knowledge base in this industry.
 
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Re: Is this the Beginning of End to IT outsourcing?

we as friends were discussing same during break hour
now in order to shift whole IT sector from India to where it's sourced from it would take alteast 10 - 15 years for countries like US
they look to india for couple of reasons
1. laborious and hard working folks
2. cheap labour (my escalation in US pays around 10$ grands to an engineer, we are hired for INR 30k for the same amount of work)
3. quality engineers (eventhough we lack infrastructure like US our engineers progress due to there never die attitude hard work and diligence. we tend to bring out solutions without resources in hand. thats what indians are famous for)
4. we study and study subject to the depth when challenged eventhough we lack hardware for the practicals we rely on theory and resolve matters which might take hours for an american
so i would say in some terms yes china is increasing its knowledge base however they still lack talent and skill indians got without any resources
 
Thread Starter #6
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Re: Is this the Beginning of End to IT outsourcing?

Agree with you here,I am not saying that the whole industry will vanish in week's but my concern is new order's are slowly drying up, IT industry earning's are falling, Pink slip are getting distributed,

Couple of my friend's have lost their job's due to shortage of project's.
 
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Re: Is this the Beginning of End to IT outsourcing?

All i can say now a days Govt jobs are the flavor of the town [:)]
 
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Re: Is this the Beginning of End to IT outsourcing?

Some good news for the ailing IT industry.

There will be a lot more of India in Apple products soon. The $108-billion maker of iPhones and iPads is scaling up sharply the work it outsources to Infosys Technologies.

The Bangalore-based IT giant has rented a 1.40-lakh-sqft office space near its headquarters in Electronics City to house employees who would work exclusively for Apple. Sources in the real estate industry who did not want to be named said the building would have the capacity to house 1,400 people. The centre will be operational by the end of the year.

It was previously reported that Apple CIO Neil O'Connor had met the Infosys top brass in Bangalore in January, leading to speculation that Apple was looking at outsourcing more to Indian companies. When contacted, Infosys said in an emailed response: "We are unable to participate in your story."

Infosys had a role in developing apps for iCloud Helped develop applications for Apple Retail Store 2.0. It has also helped in the design of frameworks for the iOS.

Apple outsources application development and maintenance work to the extent of Rs 490 crore to Indian IT services providers. It is said to account for $50 million (Rs 275 crore) of Infosys' annual revenue of $7 billion.

Assuming that the new space that Infosys is taking for Apple will house a new set of employees , it would mean that Apple would be giving an additional business of at least $65 million (Rs 357 crore) every year to Infosys, considering that each Infosys employee accounts for an average annual revenue of $47,000. Infosys has about 1.5 lakh employees.

Former employees of Infosys who had worked on the Apple account said the current work is being executed by employees across Bangalore, Mangalore, Bhubaneswar and Thiruvananthapuram . The ultra-secretive Apple does not disclose the nature of work it does with third parties. But the former Infosys employees said Infosys played a role in developing applications for iCloud — a service that allows users to access music, calendar, documents and email via the cloud and which automatically syncs with your Mac, iPad and iPhone.

Infosys has also worked on developing applications for Apple Retail Store 2.0 launched last year, where iPad displays took the place of paper placards in Apple stores. The iPad offered an interactive way to explore the features and prices of the products being advertised, and it even had a call button to summon an Apple representative to the product for assistance.

Infosys has also helped in the design of frameworks for the iOS, the operating platform for Apple devices that provides interfaces needed to write software for the platform. Many Infosys employees are trained on Cocoa, Apple's native objective-oriented application programming interface.

Apple, with revenues of $108 billion in 2011, is the largest publicly traded company in the world by market capitalization, thanks to the phenomenal success of the iPhone and iPad. The market cap briefly touched $600 billion in April this year and currently is around $571 billion .

In 2006, the company had moved to establish a 3,000-people strong technical support centre in Bangalore. But it withdrew within months following a massive backlash from Apple fans around the world who felt India would not be able to deliver the quality of support they expected. However, it looks like the quality of Indian IT outsourcing work has been too good to resist.
Infosys to set up big facility for Apple - The Times of India
 
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Re: Is this the Beginning of End to IT outsourcing?

Outsourcing took place as India was cheaper than US. As IT persons salaries grew exponentially, so did their purchasing power. Real estate became expensive, salaries were still going north, & wherever there is IT, boom was created just by single sector - IT, be it Bangalore, Pune or Gurgaon. As US cos started finding India expensive, lot of work has been now taken to Vietnam & East Europe.

IT person should understand that they are not extra-ordinary. It is just that their billing is done in $ that they get more salary, once this is gone, situation can be worse than BA/Bcom fellow.
 
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Another good new's for the IT industry

A total of 23,000 employees have started joining Infosys from this month, even as the Indian IT sector continues to grapple with uncertain economic environment in most of its American and European markets.

Bangalore-based Infosys gave offer letters to 23,000 people last year for joining work starting July, 2012, its CEO and Managing Director S D Shibulal said. "As our principle is to honour all the commitments which we have given, we are going ahead with joining of those employees," Shibulal told investors in a conference call.

These employees would undergo training for the first six months, he added. The company made a gross addition of 45,605 employees during the last fiscal ended March 31, 2012. After taking into account attrition and other factors, the net staff addition was of 19,174 persons for the year.

For the current fiscal 2012-13, Infosys plans to hire 35,000 employees, including 13,000 for its BPO operations. When asked, the company said it has not yet decided on the campus hires for 2012-13.

"Our requirements for campus hiring will be determined by business needs and at the moment, we have not finalised on our plans or the numbers. As per Nasscom directive, we will not commence campus placements before September," Infosys said in a statement. "We have spaced it (joining) out in a way which is relevant to us. The conversion rate (of hiring and joining) is usually about 80 per cent, which means that we will have about 18,000 to 20,000 people join between now and the next 12 months," Shibulal said at the conference call.

Infosys and its subsidiaries added 9,236 (gross) people in the first quarter of FY13, while the net addition during the period stood at 1,157 employees, taking its total headcount to 1,51,151 people as on June 30, 2012.

On lateral hiring, Shibulal said: "We will continue to recruit laterals (non-campus hiring) to enhance our niche capabilities or to fill in any areas where we have shortage." The company, which has given promotions to 20,000 people, effective July 1, 2012, however, deferred its decision on wage hikes to October contrary to its peers.

"We have done the promotions and progressions as we talked last time, we have done 20,000 across the corporations. If you look at 2008-2009, we had looked at the wage hike in the middle of the year. We will revisit the wage hike as usual in the middle of the year," Shibulal had said while announcing the company's financial results for April-June 2012 quarter.
23,000 employees joining Infosys from this month
 
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Staying in Pune, I know how IT guys got more than what they actually deserved. Worse, they even made fun of non-IT persons like Mech, Civil etc. & even CA/ICWA & CS. Today, all these people are more or less stable but IT person are tense. Almost 20,000 IT guys are sitting on bench !! On-site is also a dream for many now. This used to be their max earning thing. As US unemployment is very high, local person are ready to do job less than market rate. Something better than nothing and this had made off-shore option even less lucrative for US cos, not to forget the tax benefits which are being doled out by Obama administration to such US cos. High time IT guys realise that salaries don't move north by 20-30% YoY.

All this is fake. Cos like Infy hire new & old ones are laid-off, especially those less than 1 yrs. Not to forget few thousand person which are sitting on bench.

The simplest thing to do is to see total employees of such IT firms. Despite news of 23,000 or more recruits, the total strength doesn't increase proportionately !! [glasses] Wonder why cos paint fake pics all over, seems IT management plays more with photoshop than coding nowadays. [lol]
 
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Thread Starter #12
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All this is fake. Cos like Infy hire new & old ones are laid-off, especially those less than 1 yrs. Not to forget few thousand person which are sitting on bench.
That's right sir, couple of my friend's who got sacked from Infosys were replaced by fresher's,They are generating job's by sacking the existing staff[anger]
 
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The news about IT industry is not very good, approx 1.5 lacs IT professionals are sitting on bench who are working with the top 3 Indian IT companies. But completely eliminating outsourcing will never help US companies. These discussion starts after every 4 - 5 years specially in the US election year. Yesterday itself there was a townhall with our SR. VP and we were discussion the same thing, these days indian IT companies are very focusing on spending the right amount at the right place, moreover these companies should not only rely on US market and should also focus on Europe & Asia.
 
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Staying in Pune, I know how IT guys got more than what they actually deserved. Worse, they even made fun of non-IT persons like Mech, Civil etc. & even CA/ICWA & CS. Today, all these people are more or less stable but IT person are tense. Almost 20,000 IT guys are sitting on bench !! On-site is also a dream for many now. This used to be their max earning thing. As US unemployment is very high, local person are ready to do job less than market rate. Something better than nothing and this had made off-shore option even less lucrative for US cos, not to forget the tax benefits which are being doled out by Obama administration to such US cos. High time IT guys realise that salaries don't move north by 20-30% YoY.
20-30% is dream that will never come true now. If we get 15% we think we are more than fortunate now. [;)]

The news about IT industry is not very good, approx 1.5 lacs IT professionals are sitting on bench who are working with the top 3 Indian IT companies. But completely eliminating outsourcing will never help US companies. These discussion starts after every 4 - 5 years specially in the US election year. Yesterday itself there was a townhall with our SR. VP and we were discussion the same thing, these days indian IT companies are very focusing on spending the right amount at the right place, moreover these companies should not only rely on US market and should also focus on Europe & Asia.
+1000 to what you said Mukesh. It companies should look for more projects in same country. This will help in country's development as well. But all they run after is $$$$$$$ not INRs... [anger]
 
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The news about IT industry is not very good, approx 1.5 lacs IT professionals are sitting on bench who are working with the top 3 Indian IT companies. But completely eliminating outsourcing will never help US companies. These discussion starts after every 4 - 5 years specially in the US election year. Yesterday itself there was a townhall with our SR. VP and we were discussion the same thing, these days indian IT companies are very focusing on spending the right amount at the right place, moreover these companies should not only rely on US market and should also focus on Europe & Asia.
+1, well said brother,most of the IT companies has 70-80% revenue coming from US alone depending so much on one market is too dangerous,it's just a matter of time before China enter's this field and once they do we all know where the industry will head.
 
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