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Article by Mohan Babu


Think global, act local

Stringent immigration rules being imposed by many Western nations is indirectly resulting in outsourcing to India. This will lead to higher demand for people in the domestic market, though the global mobility enjoyed by Indian IT professionals will be curbed, writes Mohan Babu

Outsourcing is an indirect fallout of stricter immigration rules by Western countries. Already under political pressure to curtail immigration of labour because of the slowdown, they are getting a push from disgruntled local workers. A slowing domestic market in the West is shifting focus back to local markets. In a knee-jerk reaction, governments are closing their doors to immigrants because supply (locally) exceeds demand. This is direct fallout of the global economic conditions and one cannot lament over its impli-cations.

Every cloud, as they say, has a silver lining. The current slowdown is shifting the focus back to costs. Executives of global companies who manage large data centres and IT divisions need to keep them humming regardless of short-term market conditions. Also, they do not want to get embroiled in domestic politics by pushing for a continued migration of “cheap” foreign workers. Instead, they are shifting jobs, outsourcing them to where it is cheaper. India, with its proven outsourcing models and technical base is emerging as a favourite destination for international outsourcers.

This also means that careers for Indian IT people are going to be based and nurtured in India, not in the UK, US, Singapore or elsewhere. Again, it is hard to comment whether this is good or bad. It is definitely good for the Indian economy and companies who are going to benefit from foreign-exchange earnings. This is also going to lead to a higher demand for IT people in the domestic market in India. However, Indian IT professionals who had got used to the “perks” of flying out even before building a few years experience will not enjoy the same global mobility seen in the past decade.

Some people doubt if this shift towards outsourcing will continue in the long run. They fear that this outsourcing trend we are seeing is a “one off” and Western companies will go back to their old ways the moment the economy starts moving north.

Shailesh Singh, an IT veteran and a colleague of mine who has seen numerous swings in the industry likens the current trend in outsourcing to the shift of low-tech manufacturing of consumer goods like hosiery and sneakers out of the US about three decades ago. None of that manufacturing has returned back to the US. He adds, “Just like we may never see the return of manufacturing of shoes in the US, even though the manufacture is controlled in America by the likes of Nike, the trend towards IT outsourcing may be irreversible”.

The cost benefits and ease of management of work that justified outsourcing may prevent its movement back. However, just like Nike and Wrangler remain quintessentially American by managing the bulk of overseas manufacturing from hubs in the US; Adobe, EDS, IBM and Microsoft will remain American even if the bulk of software development is done in India.

“Think Globally” and “Act Locally” is going to become the new mantra of outsourcers, something that will become harder to undo as more global players jump on to the bandwagon.




About the Author

  • A Bio and profile of the author, Mohan Babu, can be found at his homepage
  • Mohan has authored a book on Offshoring and Outsourcing (Publisher McGraw Hill, India), a link to which can be found here
  • Mohan has also authored an Online book on "Life in the US," available for free download.
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    ©Mohan Babu: All Rights Reserved 2005

    Mohan Babu is an international consultant trying to find the ‘sweet spot’ where IT meets business. E-mail: mohan He is also the author of a recent book on "Offshoring IT Services"

    All rights are reserved. Mohan Babu ("Author") hereby grants permission to use, copy and distribute this document for any NON-PROFIT purpose, provided that the article is used in its complete, UNMODIFIED form including both the above Copyright notice and this permission notice. Reproducing this article by any means, including (but not limited to) printing, copying existing prints, or publishing by electronic or other means, implies full agreement to the above non-profit-use clause. Exceptions to the above, such as including the article in a compendium to be sold for profit, are permitted only by EXPLICIT PRIOR WRITTEN CONSENT of Mohan Babu. 

    Disclaimer: This document represents the personal opinions of the Author, and does not necessarily represent the opinion of the Author's employer, nor anyone other than the Author. This Article was originally published in Express Computers


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