Monday, July 02, 2007

According to Everest Research Group, software- and BPO-related functions worth about USD 9 billion were outsourced by big North American and European firms (primarily financial service firms) to their Indian captive centers in 2006. General Motors, Deutsche Bank, JP Morgan Chase, etc., are expanding their Indian offshore operations instead of outsourcing their software and back-office operations to Indian third-party service providers, such as Infosys Technologies, Tata Consultancy Services, and Wipro Technologies.

More than 50 centers have been set up over the past three years by such international firms in India and a majority of them plan to expand their operations two-fold over the next two years as the country offers a huge market. Moreover, such companies plan to conduct important businesses through these offshore centers. However, smaller US-based banks continue to outsource their operations to third-party vendors, such as Infosys, Genpact, and Cognizant Solutions, rather than establishing their offshore captives in India. According to Indian third-party vendors, international companies are also adopting a hybrid model under which work is divided between third-party vendors and company-owned offshore operations. Captive centers are growing at 30 percent annually and have employed more than 200,000 full-time employees for software development, back-office operations, high-end research, and product engineering.

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