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Global information technology vendors such as Cap Gemini Ernst & Young, Accenture, and IBM Global Services are currently ramping up their offshore presence in India.
Cap Gemini Ernst & Young, the ยค7.047 billion global consulting, technology and outsourcing services firm with an offshore presence in India, is increasing its employee strength from 800 to 2,000 by December 2003.
Salil Parekh, country head for Cap Gemini Ernst & Young in India, said: "We are expanding our employee strength because we are getting huge orders from our overseas clients across technologies and sectors such as utilities, energy, financial services, healthcare, consumer durables and telecom, and from across different geographies."
In order to cater to this demand, Cap Gemini is also opening up its second centre in India in the next three months.
"We have shortlisted five places namely Delhi, Chennai, Bangalore, Pune and Hyderabad. We are conducting some detailed analysis on these places and by the third quarter of this year we should be up and running with our second centre accommodating 1,000 people," Parekh said.
The company has also begun expanding its Mumbai centre. Currently, the facility can accommodate an additional 500 people.
IT analysts say competitive pressure from large Indian vendors such as Infosys Technologies, Wipro are the main reason for global vendors to ramp up their offshore service base.
An analyst at a foreign brokerage said, "Global vendors have initiated concerted efforts to strengthen their offshore base. Their effort has a greater strategic thrust than seen in the last couple of years."
Analysts are of the view that customers continue to demand lower prices, given the current business environment.
Hence, offshore services from places such as India are becoming part of the mainstream. Therefore, global vendors have the option of either losing business or minimising losses by building offshore bases.
Accenture, the $12 billion global management and technology firm, is also on an aggressive growth path in India.
Accenture's India business process outsourcing head, Pankaj Vaish, said that the firm in India currently employs approximately 1,000 people and expects to increase it to 2,500 by 2004.
He said, "We expect to grow our Solutions workforce significantly, from approximately 8,000 professionals today to as many as 10,000-12,000 by the end of fiscal ending August 31, 2003."
IBM Global Services, another multinational vendor, is looking to grow its Indian facilities to approximately 10,000.
Amitabh Ray, director-exports at IBM Global services, refused to confirm the numbers and said, "We are looking to substantially improve our offshore presence across the four locations in India namely Pune, Bangalore, Gurgaon and Kolkata. As of December 31, 2002, IBM had a total employee strength of 4,700 in this business."
However, most global vendors said that India is a key location in their global network of strategic delivery centres and has been chosen for access to a well-developed communications infrastructure, stable business environment and highly skilled technical talent pool.
India as a location enhances most of these companies' delivery network, thereby helping them provide technology and outsourcing solutions to their clients at competitive prices.
Ray said, "Customers globally are looking for competitive solutions and global vendors such as us are creating the India story. Today also large global companies are comfortable with the offshore concept and we are precisely catering to their growing demand."