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Mumbai , July 17

INDIAN IT services companies moving into different geographies must hire local talent and be proactive in their public relations to address the backlash against offshore outsourcing, according to Gartner.

Refining hiring models to employ local talent rather than have predominantly Indian staff at their centres abroad, or correcting popular misconceptions of clients and the public about Indian companies abroad, (such as that they pay much less to their employees), could be some of the appropriate measures, according to Gartner analysts.

However, there is no long-term threat to Indian IT service providers on account of the backlash against offshore outsourcing which, by year-end 2004 will have played its course, a Gartner statement said.

Apart from the political issue which has been raised basically by independent contractors who have lost a lot of business in the US, the key positive factor is that vendor companies who are in the same space as Indian IT services companies are not complaining at all. In fact, taking the cue, they are also doing the same thing, according to the analysts.

For example, MNCs are putting up their own centres in China, the Philippines, and the like, hiring local talent in large numbers and posing competition to the Indian companies.

But the reaction, both in the Indian media as well as of Indian companies, is becoming a self-fulfilling prophecy, with protestors abroad using statements and reports from India to reinforce their point, said Mr Dion Wiggins, analyst with Gartner, which held a news briefing on the issue at the Gartner summit on Thursday.

"The plans of the Indian companies and the statements of their senior management need to reflect several positive features which are contrary to popular misconceptions."

For instance, the issue of average onshore compensation for entry-level programmers compared to US counterparts ($59,000 vs $59,486).

"Even offshore employees such as those in India itself are not badly paid at all," said Mr Wiggins, who added that comparing dollar earnings with local earnings was not quite appropriate.

"In terms of purchasing power, Indian companies pay very well offshore."

Indian companies are also creating a lot of jobs in the US and other places, particularly in the area of marketing, public relations and other areas for which local talent is necessary, he added.

Mr Wiggins also said that there must be a basic education of the markets which Indian companies enter.

In the long term, the worst possible response could be to assume that the Indian IT service and BPO exports business is doomed.

"Nothing could be farther from the truth," said a statement from Gartner.

"Because the current Indian IT service market exports around $10 billion, compared to the $570 billion global IT services market, and the situation in the BPO space is even more skewed, with a minuscule portion of global BPO being done out of India today."

It added: "These markets are poised to explode for Indian service providers, not implode."

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