TotalCIO

Mar 6 2009   4:00PM GMT

Are Indian offshore companies sweating a few bounced checks?

Karen Guglielmo Karen Guglielmo Profile: Karen Guglielmo

Are Indian outsourcing firms turning down business out of fear of U.S. companies going bankrupt?

As a result of the current economy, there’s an uptick in U.S. companies sending work offshore to places like India. So you’d think Indian offshore companies would be happy about the potential new business opportunities and very aggressive about going after them. Think again.

Only a few Indian offshore companies are chasing these new deals, according to Partha Iyengar, vice president and regional research director at Gartner India. In a Reuters story published March 3, Iyengar went on to say that “Indian firms need to focus on revamping their sales models to help generate cost savings and add value to the client’s operations.” But not everyone agrees with this reason for not chasing potential new business.

In a follow-up comment to the story, one reader from India brought up the concern that U.S. clients could go bankrupt by the time payment is expected. He has a valid point. Although offshore outsourcing does provide some cost savings to U.S. businesses, it doesn’t guarantee they’ll come out of the recession in one piece.

Nonpayment isn’t a concern for Wipro Technologies, an IT solution and services provider in India. Wipro just follows good business sense and selects customers based on their ability to pay their bills, according to Theodore Forbath, chief strategist and practice leader in Wipro’s Boston office. “And in today’s market, it’s not a secret to see which companies are struggling and which are doing well,” he added.

Dean Lane, former CIO and current principal of The Office of the CIO, completely disagreed with the notion that Indian outsourcing companies are not aggressively going after new business. “In this market, anyone who can get business will take it,” Lane said. He also added that he knows of a number of second-tier (based on company size) Indian companies that are always looking for business. The payment issue is not affecting them at all.

It seems like Indian outsourcing businesses still want our business — they’re just being overly cautious about which companies they go into business with. And do you blame them?

Maybe CIOs can learn a lesson here from these Indian businesses. Even if the offshore market gets tighter and it’s harder to find a partner who wants your business, don’t give up your right to be selective. Make sure the partner is economically viable and has the services and reputation you need. You can be slow and steady. Hopefully it still means you’ll win the race — or in this case, survive the recession.

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