The president and CEO of IT services firm Tata Consultancy Services, Subramanian Ramadorai, has rejected claims that “offshoring” IT services to India and other locations was harming employment in the locales from where jobs are being transferred.
If you take a holistic view you realize that companies need to stay competitive and ‘offshoring’ is essential in that, Ramadorai said in an exclusive interview with ComputerWire.
Tata Consultancy Services (TCS) is India’s largest exporter of software and services. The company recently filed papers with the Indian Securities and Exchange Board to float its shares in an IPO. The Mumbai-based company has thus far not given any indication of when the IPO will take place.
In the US, the backlash against jobs being outsourced to India and other destinations has included criticism from the likes of a group called The Organization for the Rights of American Workers (Toraw), which held a two-day demonstration outside the Strategic Outsourcing Conference in New York in 2002. Late last year Indiana Governor Joseph Kernan canceled a $15.2m deal that would have seen the US subsidiary of Tata Consultancy Services handling the state’s unemployment benefits.
On that occasion, Democrat Kernan ruled that the size of the project was too large for local, Indiana-based firms to bid for the deal. In June this year the state paid TCS almost $1m for work it had already carried out before Kernan cancelled the deal, and said that the company could still bid for parts of the work against other local firms when it is put out for tender once more.
It’s too bad this was such an expensive lesson, a spokesperson for Republican Mitch Daniels told the Indianapolis Star newspaper in June. The larger problem is not one contract going to India, it’s hundreds of other contracts going out of state.
But TCS’ Ramadorai argued that, If you actually look at the number of jobs being ‘offshored’, it’s a very small proportion. In most cases, what we are helping companies with, is jobs that they did not have the staff to do without us. They have no choice but to offshore it because they do not have all of the skills at home. If you look at legislative and government work, there’s actually very little compared with the private sector.
If you look at the holistic picture and ask what outsourcing is all about, and also at the challenge of cost reduction in most companies, you find that for many, ‘offshoring’ is essential, Ramadorai added.
Ramadorai led TCS to be the first Indian offshore firm to break the billion-dollar revenue barrier. The company grew to prominence by offering systems integration and software development in India, usually able to offer a discount of up to 30% or more compared with doing the same job in many Western economies in need of such services.
As part of a far larger conglomerate in India, TCS does not provide regular revenue breakdowns, but talking to ComputerWire Ramadorai said that the company added 7,000 staff to its workforce last year and expects to add another 7,000 this year. But not just in India – it now has operations in locations as far flung as Hungary, Uruguay, China and Guildford in England. Sometimes we need people close to the customers too, as well as people who can speak the local language, explained Ramadorai.
Ramadorai said TCS is now working with academia and government in India to provide the right kind of training – in other words in software development and project management – so there remains a pool of highly skilled staff for his company to hire. If we don’t do something, India will run out of the right kind of people by 2008, Ramadorai said.