Friday, July 07, 2006

Pot calling the kettle black?

There will be an "All India Bank Strike" on August 1, protesting against outsourcing of normal banking services to private agencies.

Indian banks have struck it rich recently on high credit offtakes through housing and personal loans. These loans are provided by a significant extent to those that work in the high tech and Business Process Outsourcing (BPO) sectors, which take on outsourced work from foreign companies, including banks abroad.

So the very concept that brings Indian bankers money and growth is scaring them now - that work will be outsourced to cheaper locations, even abroad. Not fair, one would think, for defending our outsourcing practices is what Indian companies have done for the last decade!

Every job is potentially a candidate for outsourcing. Bangalore continues to be the most expensive city in terms of average salaries of high tech and BPO employees - costs today are dwarfed by their equivalents in the west, but given the high rate of attrition, the cost of bad infrastructure and issues with quality, the values will soon start to converge with the west. Then, it will be more common for Indian companies to choose to send work out - to smaller cities and to cheaper countries.

If you have a credit card, you can outsource today - sites like rentacoder allow you to provide specifications and get your work done online. And prices there are, quite surprisingly, a fraction of what it would cost in India. Either they're underbidding, or they're just cheaper. I'd bet on the latter.

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