January 09, 2009, 11:27 AM — The terrorist attacks in Mumbai a little while back have caused some concern that the Indian IT outsourcing industry may feel some repercussions. India remains the primary outsourcer for US companies, and this business has dramatically changed the entire Indian landscape. The country has a growing middle-class, wages are increasing, and resources continue to be put into India's educational infrastructure to accommodate the need for more tech workers.
But the terrorism of late last year, along with the United States' own flailing economy is creating something of a protectionist backlash. This sentiment is misguided however, and in fact, "bringing it all home" won't do anybody any good in the long run. We have a global, interconnected economy now, and there's no going back. Other developing countries want their share of the wealth, and increasingly, they are setting out the infrastructure, and the skill and intelligence to get it. In Al Senia's blog yesterday, he speculated that companies are reassessing the need to outsource to India, not only because of the terrorist attacks, but also in the wake of the Satyam Computer Services scandal.
He may indeed be right, but in fact, we've had more than our share of financial scandals right here in the United States, so the fact that other countries have them now and again as well shouldn't come as too much of a surprise. And, we've had terrorism here in our borders, but no companies seem to be moving out of New York. So will American companies think twice about outsourcing to India? I agree that they will, but it will be more of an economic decision than fear of terrorists. India has wonderful, highly skilled IT services, but increasingly, they are not the only emerging country in that market. American companies now have more options on the table, and India is no longer the default choice for outsourcing. So yes, American companies may think twice about going to India, but will they bring their operations back home? Not likely. India isn't the only country that wants to get into the IT outsourcing business, and several are already there. China, countries in Southeast Asia, and South Africa are all ripe for their own IT outsourcing revolutions, and as wages and expenses in India rise, other countries will step up to the plate with cheaper labor.