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Monday, June 21, 2004

Outsourcing Could Get the Better of India, Too by David Kirkpatrick via Fortune

A top offshoring CEO worries about U.S. tech expertise and competition. The IT service industry is just another commodity business. Eventually, more sophisticated business-process outsourcing—which could, say, involve taking over the management of customer records for a retail company—will become the attractive and profitable center of the industry. "The IBMs of the world will give the Infosyses and me a run for our money," says Naren Patni,founder of Patni computers, "because they have a lot of industry expertise and that's what counts in the long term."In Patni's view, outsourcing started with manufacturing—slowly, over many years. Then services started to move offshore. The distance between America and India, however, meant projects were delivered months later. "But now time and distance have collapsed," he says. "This has come on us very quickly. What people haven't realized is that now services can be traded. We are just seeing the tip of the iceberg so far, but society hasn't had the time to adapt. It's all happened in the last two to three years." What's made the difference, he says, is business's increasing acceptance of the web as a place to do business, agreement on various web standards for exchanging data, and a rapid increase in the quality and reliability of global telecom services even as prices plunged. "This has nothing to do with India," he says. "This is a bigger global change, when societies worldwide can trade services in synchronous mode. This can as easily go to China or Jordan as to India." Parts of what Mr.Patni said is correct - I do agree that this is commodity business, indian enteprises may be taken over - but what these companies are doing can be replicated by countries like china or others just like that is not true - expertise and relationship built over two decades can not be washed out overnight even in this fast age.
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