TATA Consultancy Services (TCS), Mumbai, a leading provider of
offshoring services, says it is not obstructed by the Obama
Administration. Raymond Strecker, global consulting practice head
for TATA North America, asked was it harder for TATA to operate
under this Administration, told BS&T "I'd say no, I don't see
it day to day".
President Obama vowed in his election campaign to curb the
offshoring trend and it was expected that it might become harder
for U.S. companies to shift work to cheaper labor markets, either
by directly employing people abroad or by engaging third-party
service providers based outside of the U.S.
About one"third of TCS's clients are banks and other financial
services firms, Strecker said, noting that they are becoming more
comfortable with offshoring and so are sending more strategic work
offshore. "They may have actual IT operations, versus application
development," he noted. "Our infrastructure business is growing the
fastest". That is, he explained, "inside the glass house, or data
center: remote server administration, server repair, network
monitoring, and various infrastructure services".
TATA now hopes to sell its products, such as core banking software,
directly in the U.S. Asked if the company was taking advantage of
Asia's relative strength in the current global upheaval Strecker
said, "It was our strategy before the crisis so the crisis didn't
create it, but did it create an opportunity? You'll know when we
announced our first client here."
TCS, which employees 130,000 people, is truly dwarfed by its
parent, the TATA Group, from which it was, Strecker said, "part
spun out four or five years ago". The Group accounts for three
percent of Indian economic output (GDP) and now owns a host of
traditional Western brands, from Britain's Tetley Tea, to Jaguar
cars, and The Pierre hotel on New York's Central Park.
Cash-strapped Citi bank last October sold to TCS its Indian
offshore unit, Citigroup Global Services Limited (CGSL), for $505
million in cash while agreeing to pay TATA $2.5 billion over the
next 9 years to provide offshore services to Citi. CGSL, the
business process outsourcing arm of the New York-based bank ($1.94
trillion in assets) provides back-office services in banking,
mortgage and securities processing.
Strecker described the transaction as "a great deal for us,"
noting that CGSL provided TATA with a mix of services and "12,000
experts" in them.
A consultant specializing in offshoring who was interviewed by
BS&T said banks so need to cut costs now that new regulation
will not stop them moving offshore. Preferring not to be quoted on
this point, she said, "They'll find a way around it. If I'm a bank
and I give business to Microsoft or IBM and they employ thousands
of people offshore, am I going offshore?" She added that some bank
clients have prohibited her from discussing the fact they they have
operations offshore.