According to research from Computer Business Review, the 50 largest services suppliers (based on most recent annual sales) had 430,000 of their total workforce of 1.7m employees located in India. This represents a major increase during the last two years. In 2005, the top 50 employed 212,000, or 16%, of their 1.3 million staff in India.
The numbers have been partly influenced by the rapid growth experienced by India’s major services exporters, who now occupy seven of the top 50 rankings. Between them, TCS, Wipro, Infosys, Cognizant, Satyam, HCL, and Patni have more than doubled their combined headcount in the past two years to 354,000, with the vast majority of these workers based in Indian delivery centers.
A total of 28 of the top 50 firms now have a direct presence in India, up from 19 two years ago, while four of those without have alliances with India contractors to provide offshore support (SAIC, Steria, Lufthansa and Ordina). The majority of those suppliers without an Indian presence are focused on the US government and defense sectors such as Lockheed Martin, Northrop Grumman, and CACI where regulation and security concerns have prevented global delivery models from taking off.
Some vendors have been more aggressive than others in developing their Indian operations. Both IBM Global Services and Accenture have more than 20% of their employees based in the country, ahead of HP Services (approximately 17%), and EDS (around 11%). Capgemini and CSC have made acquisitions in the last six months to boost their Indian headcounts.
But India is not the whole story of global sourcing in 2007. Many suppliers, including those based in India, are supplementing their facilities in their subcontinent with delivery centers in other low-cost locations in the Far East, eastern Europe, and Latin America, in order to reduce their dependence on the increasingly competitive Indian labor market and meet the demands of clients for specific language and service skills.
ComputerWire estimates that the top 50 suppliers have a combined 537,000 employees based in low-cost global sourcing locations, with India accounting for the lion’s share of this figure with 80%. For Nordic vendors TietoEnator and EDB Business Partner, Poland and the Baltic region are the preferred sourcing locations, while French vendors Capgemini, Atos Origin, GFI, Sopra, and Steria all use Morocco as a sourcing hub due to the country’s supply of low-cost French-speaking labor.
China is tipped to emerge as a major sourcing center for IT and back-office skills in the next few years, and it was the second most popular location for the top 50 vendors. Some 18 of the top 50 have global souring centers in China, with India’s TCS building one of the most prominent operations in the country. The company plans to increase its headcount in the country from 800 to 5,000 within five years.
Eastern Europe is the third most popular sourcing location, with 17 of the top 50 companies having a direct presence in the region. Poland, Hungary, and the Czech Republic are the three most commonly used countries, which suppliers are predominantly using to provide helpdesk, infrastructure and back-office processing support to central and western European clients.
Latin America is quickly gaining in popularity, with 12 of the top 50 have sourcing centers in South or Central America. Mexico, Argentina, Brazil, and Costa Rica are the most mature sourcing locations within this region, and it is Indian vendors that are leading the charge. Cognizant set up an operation in Buenos Aires last year, while TCS has more than 3,000 employees spread across facilities in Chile, Uruguay, and Brazil, supporting clients including ABN Amro.
