More woes for India-based outsourcing

Filed in archive Offshoring by Scott Wilson on November 26, 2008

Not to minimize the very real human tragedy and other geo-political implications of the terror attacks currently paralyzing the Indian city of Mumbai, but the first technology related thought to cross my mind was, wow, this is a another unfortunate blow for India's off-shore outsourcing in a time when the industry really didn't need any further disruptions or disadvantages.

Mumbai, of course, is well removed from Bangalore, the tech hub of the country, but from half a world away, I'm not sure that many CIOs will appreciate the separation. Bangalore has not been immune to similar terrorist attacks, and the very fact of such vulnerability and unrest in the country is sure to have a chilling effect on businesses considering off-shoring their technology operations. With the market already depressed, and competition rising in China (which has depressingly efficient internal security services which effectively remove these issues from consideration in that country), this is the last thing that the Indian tech industry needs right now.

While terrorist attacks have been a reality in India for years, the relative isolation of Bangalore from incidents, combined with the general perception that the Indian government was the primary target, certainly seemed to insulate India-based outsourcing operations from any ill-effects... the industry exploded even in the wake of significant bombings in Mumbai in 2006. Of course, at the time, there were fewer options available to firms looking to outsource.

The disturbing new perception that American and other Western citizens may have been the primary targets in the most recent attacks, combined with the rise of China-based off-shoring operations, may change that. It's a short step from targeting American citizens to targeting American interests, and there is a lot of American interest in Bangalore. Responsible CIOs are going to be looking at their options right now, and India may be dropping off the top of the list.