Indian Outsourcers Living Large on Demand
Beyond that, the Indian companies are expanding into new areas such as network and data-center management, consulting, and business process outsourcing of such departments as human resources and accounting.
Infosys had been a leader in introducing new services and developing a reputation for innovation, industry observers say. "It feels like it's getting to the point where you don't get fired for hiring Infosys," says Roopa Unnikrishnan, a manager with organizational performance consulting firm Katzenbach Partners, putting a new spin on an old IBM (IBM) adage.
But expanding into new areas hasn't been a slam-dunk for the Indian companies, says Schmidt. "The results of that are extremely mixed," he says. "I haven't seen dramatic growth in those businesses for Infosys and others."
Higher PayBut for now, analysts widely believe there's so much offshore opportunity that the multinationals will have little effect on Indian firms' revenue. Where they are already having a notable impact, however, is on labor costs, which threaten operating margins. It's a case of simple macroeconomics. As the multinationals build up their workforces in India, the competition and demand for labor has intensified, pushing up wages 10% to 15% a year.
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