In offices scattered across Bangalore, Indians take on an array of tasks ranging from writing computer game codes for companies based in Silicon Valley to working on technology for some of the world’s biggest car makers.
India is often referred to as “the world’s back office”. But the country’s IT outsourcing industry has been experiencing slowing growth amid rising labour costs and increased challenges from other emerging countries offering cheap services to the West.
It has resulted in Indian companies and the government striving to develop the IT sector to ensure that it remains the destination of choice for global corporations as outsourcing demands evolve.
“There have been challenges,” says Vittal Raj, the international vice president of Isaca – an association that focuses on IT governance. “If we look at the last couple of years, there has been a global drop in outsourcing from the US and Europe. There have been a lot of emerging IT outsourcing destinations that have been growing at faster rates and are certainly challenging the position that India holds.”
China, the Philippines, Indonesia, Thailand and Brazil are among the countries competing with and often undercutting India for bigger shares of the outsourcing pie.
According to a list of the top outsourcing destinations globally for 2014 compiled by Tholons, an investment advisory firm, six of the top 10 cities are in India. Bangalore remained in first place. But Manila in the Philippines climbed a place from last year to second, displacing Mumbai.
“The other thing that they had not been focusing much on [in India] was training and management retention,” says Mr Raj. “These were a couple of things that had an impact on the customer satisfaction levels, the service levels. The most important factor here is the cost.”
Last month, Yahoo axed about 400 jobs at its Bangalore office. There have also been reports recently in the local media of IBM scaling back in India. In terms of Indian IT companies that take on functions outsourced by US and European firms, growth is slowing.
Before the global economic slowdown, India’s IT sector was experiencing annual growth of almost 30 per cent, but that has now dropped to 12 to 14 per cent, says Rohit Sinha, the vice president of sales, rest of the world, at Blue Star Infotech, a global outsourcing company listed on the Bombay Stock Exchange and National Stock Exchange in India.
Acquiring talent in India has also become a major challenge as local and international companies compete for the country’s tech-savvy workers.
The subcontinent became a popular destination for IT business outsourced because of its large population of English-speaking workers and low costs, but because of the challenges and shifting demands it is being forced to evolve beyond those attributes.
“As the industry matures, it is imperative for service providers to gear up and catch on to these trends as well,” says Mr Sinha. “Every IT company has to adapt to these changes today for its survival. Things have changed completely. Outsourcing is no longer about lower cost or cheaper manpower. It is more about skilled manpower.
“Clients today are more interested to know what you can deliver smartly, and how it will benefit the client’s business. Clients today are looking for vendors who can add value, understand business, work as a partners and establish a link between technology implementation and return in investment.”
India’s IT sector generated US$118 billion in the past financial year and employs 3.1 million people, which is about a quarter of organised private sector employment in India, according to Crisil, a ratings and research agency in India which is a subsidiary of Standard and Poor’s. About 30 million workers are in organised employment overall.
“The sector has practically driven growth in organised private jobs in the country over the past decade,” analysts at Crisil wrote in research note released last week. But it forecasts that new jobs in India’s IT services industry will halve by 2018, even though it expects healthy double-digit revenue growth in the sector.
“This contrasts with the hiring pattern of the last decade, which had mirrored revenue growth in the industry,” Crisil says. “The paradigm shift will come as IT services vendors struggle to crank up profitability in a milieu where global weakness is forcing their clients to optimise costs to hold on to margins.”
This is prompting India’s IT industry to focus on providing higher-value services and cut costs, the firm said.
“Vendors are gradually adopting just-in-time hiring and increasing the proportion of fixed-price contracts in their portfolio, which reduces the need to maintain flab on the bench. Additionally, they are migrating towards higher-value service offerings such as consulting, investing in intellectual property-based products and leveraging on the emergence of social media, mobile, analytics and cloud.”
Two years ago, a Florida-based consultancy delivered the grim prediction that 2014 would be the year that additional offshoring of jobs from the West to low-cost countries would begin to decline. In the same report, The Hackett Group said that within eight to 10 years the flow of jobs offshore would cease completely.
But industry leaders in India believe that the country still has a vital role to play.
“The industry is rejigging itself for the new requirements,” says BVR Mohan Reddy, the executive chairman of Cyient and the vice chairman of the National Association of Software and Services Companies.
“The customer requirements are changing. Customers are not looking for pure IT services, they are looking for support for change in their businesses. Mobility, analytics, cloud and social are key technology drivers for future growth and transformation.”
He adds that while other countries have certain advantages to offer in outsourcing, “none of these destinations, however, have large capacity or strong processes to scale to become real threat to Indian IT industry”.
Cyient, an IT company based in Hyderabad, is putting in a number of initiatives to adapt to the challenges that the sector is facing, Mr Reddy says.
“We are recruiting more domain experts locally to address the domain knowledge issues. We have a major initiative to make innovation as a culture in the organisation.”
With the Indian government investing in technology infrastructure and a national policy geared towards boosting IT revenues, Mr Raj says the sector still has enormous potential.
“If we sort out the fundamental issues of making sure the workforce is employable and also pricing options, with a good track record for outsourcing which is high quality, we are looking at India holding a good place. But certainly there are challenges and unless and until we start running, I don’t think we’ll be where we are already.”
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COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
Skewed figures
In the village of Mevagissey in southwest England the housing stock has doubled in the last century while the number of residents is half the historic high. The village's Neighbourhood Development Plan states that 26% of homes are holiday retreats. Prices are high, averaging around £300,000, £50,000 more than the Cornish average of £250,000. The local average wage is £15,458.
Test
Director: S Sashikanth
Cast: Nayanthara, Siddharth, Meera Jasmine, R Madhavan
Star rating: 2/5
COMPANY%20PROFILE
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Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
The bio
Date of Birth: April 25, 1993
Place of Birth: Dubai, UAE
Marital Status: Single
School: Al Sufouh in Jumeirah, Dubai
University: Emirates Airline National Cadet Programme and Hamdan University
Job Title: Pilot, First Officer
Number of hours flying in a Boeing 777: 1,200
Number of flights: Approximately 300
Hobbies: Exercising
Nicest destination: Milan, New Zealand, Seattle for shopping
Least nice destination: Kabul, but someone has to do it. It’s not scary but at least you can tick the box that you’ve been
Favourite place to visit: Dubai, there’s no place like home
How to help or find other cats to adopt
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
The five pillars of Islam
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Tightening the screw on rogue recruiters
The UAE overhauled the procedure to recruit housemaids and domestic workers with a law in 2017 to protect low-income labour from being exploited.
Only recruitment companies authorised by the government are permitted as part of Tadbeer, a network of labour ministry-regulated centres.
A contract must be drawn up for domestic workers, the wages and job offer clearly stating the nature of work.
The contract stating the wages, work entailed and accommodation must be sent to the employee in their home country before they depart for the UAE.
The contract will be signed by the employer and employee when the domestic worker arrives in the UAE.
Only recruitment agencies registered with the ministry can undertake recruitment and employment applications for domestic workers.
Penalties for illegal recruitment in the UAE include fines of up to Dh100,000 and imprisonment
But agents not authorised by the government sidestep the law by illegally getting women into the country on visit visas.
FORSPOKEN
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Company%20of%20Heroes%203
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Star%20Wars%20Jedi%3A%20Survivor
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Diablo%20IV
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Baldur's%20Gate%203
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The%20Legend%20of%20Zelda%3A%20Tears%20of%20The%20Kingdom
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Marvel's%20Spider-Man%202
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Assassin's%20Creed%20Mirage
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Starfield
%3Cp%3EDeveloper%3A%20Bethesda%20Game%20Studios%0D%3Cbr%3EPublisher%3A%20Bethesda%20Softworks%0D%3Cbr%3EConsole%3A%20PC%2C%20Xbox%0D%3Cbr%3ERelease%20date%3A%202023%3C%2Fp%3E%0A
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
Killing of Qassem Suleimani
5 of the most-popular Airbnb locations in Dubai
Bobby Grudziecki, chief operating officer of Frank Porter, identifies the five most popular areas in Dubai for those looking to make the most out of their properties and the rates owners can secure:
• Dubai Marina
The Marina and Jumeirah Beach Residence are popular locations, says Mr Grudziecki, due to their closeness to the beach, restaurants and hotels.
Frank Porter’s average Airbnb rent:
One bedroom: Dh482 to Dh739
Two bedroom: Dh627 to Dh960
Three bedroom: Dh721 to Dh1,104
• Downtown
Within walking distance of the Dubai Mall, Burj Khalifa and the famous fountains, this location combines business and leisure. “Sure it’s for tourists,” says Mr Grudziecki. “Though Downtown [still caters to business people] because it’s close to Dubai International Financial Centre."
Frank Porter’s average Airbnb rent:
One bedroom: Dh497 to Dh772
Two bedroom: Dh646 to Dh1,003
Three bedroom: Dh743 to Dh1,154
• City Walk
The rising star of the Dubai property market, this area is lined with pristine sidewalks, boutiques and cafes and close to the new entertainment venue Coca Cola Arena. “Downtown and Marina are pretty much the same prices,” Mr Grudziecki says, “but City Walk is higher.”
Frank Porter’s average Airbnb rent:
One bedroom: Dh524 to Dh809
Two bedroom: Dh682 to Dh1,052
Three bedroom: Dh784 to Dh1,210
• Jumeirah Lake Towers
Dubai Marina’s little brother JLT resides on the other side of Sheikh Zayed road but is still close enough to beachside outlets and attractions. The big selling point for Airbnb renters, however, is that “it’s cheaper than Dubai Marina”, Mr Grudziecki says.
Frank Porter’s average Airbnb rent:
One bedroom: Dh422 to Dh629
Two bedroom: Dh549 to Dh818
Three bedroom: Dh631 to Dh941
• Palm Jumeirah
Palm Jumeirah's proximity to luxury resorts is attractive, especially for big families, says Mr Grudziecki, as Airbnb renters can secure competitive rates on one of the world’s most famous tourist destinations.
Frank Porter’s average Airbnb rent:
One bedroom: Dh503 to Dh770
Two bedroom: Dh654 to Dh1,002
Three bedroom: Dh752 to Dh1,152
Moon Music
Artist: Coldplay
Label: Parlophone/Atlantic
Number of tracks: 10
Rating: 3/5
The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
Emergency
Director: Kangana Ranaut
Stars: Kangana Ranaut, Anupam Kher, Shreyas Talpade, Milind Soman, Mahima Chaudhry
Rating: 2/5
Anghami
Started: December 2011
Co-founders: Elie Habib, Eddy Maroun
Based: Beirut and Dubai
Sector: Entertainment
Size: 85 employees
Stage: Series C
Investors: MEVP, du, Mobily, MBC, Samena Capital
The specs
Engine: Four electric motors, one at each wheel
Power: 579hp
Torque: 859Nm
Transmission: Single-speed automatic
Price: From Dh825,900
On sale: Now
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
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2024%20Dubai%20Marathon%20Results
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2025 Fifa Club World Cup groups
Group A: Palmeiras, Porto, Al Ahly, Inter Miami.
Group B: Paris Saint-Germain, Atletico Madrid, Botafogo, Seattle.
Group C: Bayern Munich, Auckland City, Boca Juniors, Benfica.
Group D: Flamengo, ES Tunis, Chelsea, (Leon banned).
Group E: River Plate, Urawa, Monterrey, Inter Milan.
Group F: Fluminense, Borussia Dortmund, Ulsan, Mamelodi Sundowns.
Group G: Manchester City, Wydad, Al Ain, Juventus.
Group H: Real Madrid, Al Hilal, Pachuca, Salzburg.
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SHAITTAN
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