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Small US biz too wakes up to BPO
April 30, 2004 13:33 IST
The rhetoric by politicians, labour unions and media against outsourcing of jobs to countries like India is having the opposite effect, as the campaign has opened the eyes of small businesses to the possibilities of offshoring, according to industry experts.
Prashant P Kothari, whose Washington-based String Information Services helps small businesses that do not do work overseas on their own, said that a year ago, he spent much of his time explaining the basics of offshoring.
Potential customers often wanted to know if people in India can speak English but now they come in with a basic understanding of the process--thanks to the publicity and propaganda against outsourcing.
"The comfort level has definitely increased," Kothari was quoted as saying by The Washington Post.
"The media attention is raising their (small business) awareness about outsourcing in India. It is raising on their radar." Many companies with a few employers here are now taking advantage of outsourcing, matching United States companies with development centres abroad.
Two years ago, consultants like Kothari created less than 10 per cent of India's information technology revenue, according to an October 2002 report by Merrill Lynch. But the role of such companies in outsourcing is expected to rise significantly, the Post said.
String's business has more than doubled in the past year, said Kothari. It now has a dozen clients and with an Indian partner owns a 150-person development centre in Chennai.
String's business has more than doubled in the past year, said Kothari. It now has a dozen clients and owns a 150-person development centre in Chennai along with an Indian partner.
"If you are looking for 2,000 people on a regular basis, it makes sense to do it yourself," Kothari said.
"But if you are one of these smaller outfits and you only need 30 or 50 people for a few months of the year, I just don't think the cost is justified."
Todd Bramblett, founder LeverPoint Inc., who sets up American companies with teams of software developers in India, had used offshore developers to do work for a software start-up he previously led.
The start-up failed but the experience sparked a new business idea. LeverPoint now has 270 employees in New Delhi doing technical work with 30 in the U.S. managing projects.
Atlantic Management Centre Inc., which sells products and services to the Government, is one of LeverPoint's eight customers. Gloria E. Phillips, AMCI's Chief Executive, said she considered outsourcing two years ago but never went through it because she could not find a "comfort level."
But she changed her mind after learning more about the process and its potential financial benefits and launched an offshore project with LeverPoint in November.
She estimated that the company was able to build software that manages environmental sensors for 35 to 40 per cent less than it would have cost to do the job with U.S. employees. One of the biggest advantages, Phillips said, is that the company did not have to hire new full-time employees for the project.
She added that AMCI did not lay anyone off when it contracted with LeverPoint.
"It gives us a choice. It is another capability in our toolbox." She said she will use offshore developers again under the right circumstances.
Suresh Balabisegan cites the dot-com crash as the biggest impetus for the growth of companies like DigiBlitz Technologies Inc, a local outsourcing firm he founded in 2001. As small businesses struggle to survive, more and more turn to outsourcing as a way to save money, he said.
DigiBlitz has a 100-person operation in Chennai. It provides call centre and technical support services for clients.
The company also acts as a liaison, setting up US companies with other Indian development centres and managing the work for customers. The company, which also targets small companies, now has 10 clients.
As a venture capitalist with New Markets Growth Fund in College Park, Maryland, Rajesh Rai's day job is to review business plans. But he has become so convinced of the need in the market for offshore services that he is now helping several of his associates set up such a business. "As a small company, you don't have the resources, the knowledge, the contacts to know how to do it," he said.
"They are looking for somebody they can talk to here. They don't just want a middleman. I think if there is a company that can do this in the middle well, there is definitely an opportunity for that."