Offshoring to India Drives Changes in the Global Consulting Industry

The largest American and European technology consulting companies have created tens of thousands of jobs in foreign countries including India, China, the Philippines, Canada, the Czech Republic and Mexico, among others. Nations with large populations of well-educated, English-speaking people are seeing tremendous job growth in IT and other business services.

The savings to employers can be impressive. However, due to intense demand for quality employees, white-collar wages have been rising rapidly in India, China and elsewhere. Major technology and consulting firms in India have continually instigated significant pay raises. Nonetheless, turnover is high, and it is not unheard of for an employee to jump ship twice in one year, in search of higher pay. Top Indian consultancies, including Wipro and Tata Consultancy Services, posted significant revenue growth in recent years. Many of these firms continue to hire and expand aggressively.

Offshoring is having a tremendous impact on all facets of the consulting industry. In some cases, the industry has seen consulting and outsourcing companies from such nations as India making acquisitions in the U.S. or in Europe. For example, Wipro, a massive India-based IT outsourcing company that is enjoying soaring success, acquired NerveWire, a Boston-based e-commerce and internet consulting company. Wipro is also expanding globally, opening a global development center in Mexico and a business process outsourcing center in the Philippines.

Aggressively managed IT consultancies based in India, such as Wipro, have operating costs that are low enough that they are able to significantly undercut the prices of U.S.-based work, and they gained market share at a rapid rate. The top Indian firms enjoyed booming revenue growth in the past several years. Many even posted growth during the worst of the economic recession since ailing companies in the U.S. and elsewhere increasingly outsourced business needs to cut costs.

The relatively low operating costs of India have led foreign-based firms to open large offices of their own within India, with tens of thousands of local employees. Other offshore employees work in highly skilled technical areas such as research and development and engineering. Research and analysis of all types are rapidly being offshored also, particularly to India, as are professional services. A great deal of market research and market analysis work has moved to India, where former employees of consultancies such as McKinsey have set up large shops that provide services at very competitive rates.

Other offshore workers support U.S. and Europe-based management consultants by doing basic research, preparing reports and building PowerPoint presentations. While some of these tasks can be offshored, it is next to impossible that the jobs of lead management consultants or managing directors will be fully offshored—clients want face time with lead consultants, and most projects require that consultants spend considerable time on-site in clients’ facilities.

In IT consulting, large numbers of jobs will continue to be offshored. With intense management supervision onsite and proper lines of communication and control, many types of programming can be accomplished from anywhere. Adding to this trend is the fact that collaboration software and systems have advanced steadily, including such tools as online meetings featuring video and web-based whiteboards.

SPOTLIGHT: Tata Consultancy Services Limited (TCS)

Tata Consultancy Services Limited (TCS) is one of India’s largest consulting companies and one of Asia’s largest independent software and services organizations, with a presence in 55 countries. The firm is part of the Tata Group, an Asian conglomerate with interests in energy, telecommunications, financial services, chemicals, engineering and materials. TCS offers a range of services, including analytics and insights, blockchain, cognitive business operations, cybersecurity, enterprise applications, quality engineering, automation, artificial intelligence (AI), cloud, consulting, Internet of Things (IoT), digital engineering, interactive services and sustainability services. The company’s TCS BaNCS core banking software suite is used by retail banks, and includes functions for universal banking, core banking, payments, wealth management, foreign exchange, compliance and many more operations. Other industries served by TCS include capital markets, consumer goods and distribution, communication, media, technology, education, energy, utilities, hi-tech, information services, insurance, life sciences and healthcare, manufacturing, retail, travel, transportation and hospitality. The firm has formed alliances with leading technology companies, academic institutions and consulting firms to provide customers with expertise in technology fields in which it does not specialize. Development of new strategies and technologies occurs in TCS’ global centers of excellence, located in several nations. TCS has offices throughout North America (with regional headquarters in New York City), some of which are development centers and centers of excellence.

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