News of Indian IT giants setting up centers in the U.S. and Europe has been doing the rounds lately, with TCS being the latest to announce the opening up of their largest facility in North America. This has once again triggered the trend of “Reverse Outsourcing” or “Reverse Offshoring.” The trend has shown up once again on the outsourcing radar thanks to the gloomy U.S. economy and the stringent foreign visa policies.
Many industry commentators have termed the trend as “India outsourcing outsourcing,” but the reality is that Indian providers are actually generating jobs, may be not in big numbers, for the U.S. population. And in a situation, when the economy is slowing and payroll numbers declining, every new job counts.
However, the providers too have a hidden agenda behind all these new jobs and centers. “As the restrictions imposed on the number of H1-B visas issued every year hinders movement of people from India to the U.S. and there is a need to be close to the customers, opening centers overseas provides an alternative to getting visas for workers,” said Azim Premji, Chairman, Wipro. “Obtaining a short-term visa for skilled foreign workers in the U.S. is highly competitive.”
Wipro also wants to expand in Europe through acquisitions, especially in Germany where Wipro has earmarked as much as $250 million for a possible purchase. Having a presence in Europe is important to Wipro's strategy to diversify away from its core U.S. technology services business. It already employs nearly 7,000 people in Europe and about a quarter among them are local recruits.
The Indian IT giants are using this tactic of “reverse offshoring” to expand deeper into western countries to extend their global reach and move to higher-value services.
And this is not all. With the rupee having appreciated by as much as 12 percent against the U.S. dollar in the past few months, cost-cutting too assumes a tremendous significance now. And thus, hiring local talent for the foreign centers, especially in countries in the European Union, Australia and China proves approximately 25-30 percent cheaper than transferring Indian talent to foreign soil.
