Business Facilities - December 2007 - (Page 49)

outsourcing services performed by professionals within the United States, and Cayuse Technologies will help fulfill that demand,” says Randy Willis, a senior executive at Accenture. “Working with Cayuse Technologies also complements Accenture’s efforts to build and maintain a global workforce that mirrors that of its clients, employing diverse groups of people from different backgrounds, with a vast range of skills and experience.” And another new trend is emerging in which some India-based companies are doing some offshoring of their own—in the U.S. Bangalore, India-based Wipro Technologies is opening a global software development center in Atlanta, where it will work with the University System of Georgia to educate and train nearly 500 employees. The company says its new center will enable it to provide localized and closer-to-customer service for its expanding technology services in the Americas. “The work we’re doing requires more and more knowledge of the customers’ businesses, and you want local people to do that,” says P.R. Chandrasekar, president of Wipro Technologies. Wipro has a dozen offices in the U.S. and development centers in Brazil, Europe, China, Canada, and Mexico. Despite this nascent “reverseoffshoring” trend, offshoring by U.S. companies will only become more common, researchers say, and the services being outsourced will continue to become more sophisticated. Majority of Silicon Valley’s Top Firms Offshore in India I PHOTO CREDIT: PHOTODISC ® f California’s Silicon Valley is any indication, leading technology companies are counting on offshoring to deliver high-end products and services to their global clients. A study by the Zinnov research group of the top 50 Silicon Valley companies, comprised of 15 software developers, 27 hardware developers, and eight conventional or non-information-technology companies, found that 33 had operations in India. The software companies, including Oracle and Symantec, are leading the offshoring trend in India, with 14 out of 15 from the Silicon Valley operating there, according to the study. In most cases, the companies are using in-house “captive” centers, in addition to using third-party vendors. Captive centers, ranging in size from 30 to 9,000 employees, are being used for core competency operations such as research and development, while third-party vendors are used for non-critical activities. The most common location in India is Bangalore, while some companies have a captive center presence in Delhi, Hyderabad, and Pune. Hardware manufacturers from the Silicon Valley have concentrated their offshore operations in China, Taiwan, and Malaysia, thanks to the cheap skilled labor available there, but companies such as Texas Instruments, Motorola, and Intel have operations in India. Zinnov’s research found that 17 of the 27 hardware developers have captive centers in India, and 13 (including some that also have captive centers) use vendors (mainly for IT and infrastructure management and maintenance). The eight conventional industries companies from the Silicon Valley group have taken a more conservative approach to offshoring, Zinnov reported, as only two have operations in India. These companies tend to offshore their sales offices or distribution networks, instead of large-scale operations, but their use of offshoring is expected to progress. The Zinnov study concluded that more technology companies are finding they can gain competitive advantages thanks to offshore talent pools, lower costs, and shortened delivery cycles. The Silicon Valley trend can be looked at as a microcosm for the global technology industry, according to Vamsee Tirukkala, managing principal at Zinnov, who notes that 60% of U.S. technology companies are offshoring in some way, especially as the prices of their products drop and they must find ways to cut costs. “Companies can contain costs through multiple ways, and one way is offshoring,” Tirukkala says. “With lower costs and a faster time-to-market, companies find that they can take more risks and develop more products. That’s the reality today.” BUSINESS FACILITIES 49

Table of Contents Feed for the Digital Edition of Business Facilities - December 2007

Business Facilities - December 2007 Contents First Word Snapshots Metro Spotlight: Albuquerque, New Mexico Corporate Moves: North Carolina 2007 Ecomonic Development Deal of the Year Awards State of the Year Seeking Supply Chain Solutions Mississippi Means Business Corporate Moves: South Carolina Biomedical Momentum in Florida's High Tech Corridor Trends in Offshoring Metro Spotlight: Stillwater, OK Metro Spotlight: Atlanta, GA Advertiser Information 2007 Salary Survey

Business Facilities - December 2007

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