Now It's The Indian Connection
The Age
Tuesday December 16, 1997
OUTSOURCING used to be the buzz word of the IT industry as it grappled with a desperate shortage of the human skills needed to stay afloat in the tidal waves of technological development.
Now there is a new word churning in the wild worldwide digital surf - offsourcing.
It was invented in India where it now is a multi-billion dollar international industry with work now being done on every continent.
India's advantages are several, not least the low cost and high skills of its IT workers, but their ace is that they speak English. But for that the Russians might have taken much of the cream.
While Indian operators are discreet about their customers, it seems that Telstra is among the big names using the Delhi connection to handle their huge and pressing Year 2000 problems. Others include major banks, mining and industrial corporations.
Hindustan Computers Ltd (HCL) the biggest of the Indian offsourcing companies, has more than 3000 programmers, analysts and systems engineers working at its factories in northern India. It has offices in 20 countries, including two here with 30 resident engineers.
Shailesh Panday, HCL's head of marketing in Australia, declined to put a dollar figure on his Australian business, but it clearly runs into many millions of dollars, principally for Y2K compliance work. Last year HCL turned over $US600 million, and the boom, says Panday, is just starting.
"Because of the focus on Y2K work, many companies are putting their development work on the back seat. In three or four years, when Y2K has been done, all of that new work will come in. We will be very busy for the next 10 years."
Using full-time, broadband satellite links to instantly put the Indian army of programmers virtually anywhere it is needed, computer systems are updated and maintained, programs are checked, revised and rewritten, and new systems evolved - all at a fraction of the cost of local outsourcing.
Telecommunications have made it possible for an analyst in, say, Bangalore, to go into and maintain a computer system in Melbourne. "Five kilometres or 5000; it doesn't matter," said Panday.
HCL started in a New Delhi garage in 1987 in the wake of an Indian Government decision to push out foreign IT companies. HCL seized the opportunity to begin building its own computers.
"We set up in the US to expose our designs there," Panday said. They did not sell well, so HCL began exporting services - "like the contracting system you have here, except the people were coming from India. But the saving was not great. When you are looking at the Indian option, a key driver has to be cost. Once you have a person working in Australia, his living costs are in Australian dollars, the company pays Australian taxes and other charges. The cost of doing business becomes the same as for any Australian company, and we have to fly the operator back and forth."
But, in software, and particularly in Y2K compliance work, now the big earner for India, much of the work is done in backrooms. "Once you have done the high level stage of the design with the client you can do the programming in India," he said. "Then the infrastructure staff costs are Indian. The only overhead is telecommunications."
© 1997 The Age