Adverse impact of globalization on Indian software firms: Cloud computing pushes down deals with MNCs by 17%

Impact of globalization is now being felt in a major sector, India's software industry, which is known to depend heavily on clientele from multinational corporations (MNCs). International giants, such as International Business Machines Corp (IBM), Amazon.com and Accenture PLC, are fast giving up their practice of outsourcing servers and accessing software via personal computers.
The result, according to a study by top consulting firm KPMG LLC, is dire: In 2014 alone, outsourcing deals declined by 17 per cent to 120.4 billion dollars from 145.5 billion dollars a year earlier. The reason, says top New York-based daily Wall Street Journal (WSJ), is that companies like IBM, Amazon.com and Accenture PLC, is that they have fast led their "way into the cloud" and more interested in accessing software via internet.
According to the daily, "New job growth is projected to hit a five-year low this year, says the National Association of Software and Services Companies." It adds, "Tata Consultancy Services, India’s largest outsourcer by revenue, added 19,192 jobs in the year ended in March, down from 24,268 over the same period a year earlier, according to the company’s annual reports."
WSJ warns, "If Tech Mahindra, Infosys Ltd., Tata Consultancy Services Ltd., Wipro Ltd. and India’s other big IT outsource companies fail to change, the consequences for India’s economy could be dire", even as quoting David Smoley, AstraZeneca PLC's technology chief, as saying that the company expects to cut in half the $750 million the drug maker used to spend annually on outsourcing over the next two years."
According to Smoley, the number of people working on information technology with the firm also would drop by 50 per cent, and this is nothing but part of a major shift toward cloud computing, which is starting to bite into the revenue and profits as well as hiring in India’s critical outsourcing industry and poses an existential threat to the players that fail to adapt."
Consequences to India's economy could be dire, suggests WSJ. "Outsourcing accounts for around 20 per cent of all of India’s exports of goods and services. The industry employs millions of Indians and has become an important route into the middle class in the world’s second-most populous country", it adds.
"India’s outsourcing giants rose to prominence in the late 1990s because they could deploy armies of engineers at lower salaries than their Western counterparts to build bespoke programmes as well as monitor and maintain in-house computer networks cheaply for the world’s biggest companies", the daily says.
It adds, "They wrote basic code for databases and enterprise software and handled labor-intensive jobs, such as upgrading their customers’ copies of Microsoft Office, Explorer and other mundane programmes.:"

Pointing that all this is going to become history with cloud computing taking over, WSJ says, "As more companies ditch their own data centres for cloud storage and replace custom-made software with off-the-shelf cloud versions, the need for coders and technicians has fallen drastically, undercutting India’s low-cost-labour advantage."

Comments

Will Trump administration use US religious freedom report to further pressure India into submission?

Already under pressure from the Trump administration, which has reportedly asked India—successfully, some would say—to remove high tariffs on American products, there is reason to wonder whether Washington might use the recommendations of the latest United States Commission on International Religious Freedom (USCIRF) Annual Report to further act against the Government of India.

Gujarat No 1 here too? Cops justify torture, insist: Muslims, Dalits, Adivasis, migrants are 'naturally prone' to crimes

A new report, "Status of Policing in India Report 2025: Police Torture and (Un)Accountability", states that Gujarat tops the list of 16 states and one Union Territory, with 63% of its police personnel "strongly endorsing" torture. Furthermore, 49% of Gujarat’s police personnel were found to have what the report calls a "high propensity" for torture, considering it "necessary and acceptable" for obtaining information across various crime categories—second only to Jharkhand (50%). In sharp contrast, Kerala has the lowest percentage of police personnel "justifying" torture (3%) and the lowest "high propensity" for violence (1%).

A traditional Marxian view? Like nuclear weapons, AI poses 'direct existential threat' to human civilization

The other day, I was talking with YS Gill , whom I have known as an incisive analyst since my youth, when he, like me, was associated with the Communist Party of India (CPI). A passionate science activist committed to creating awareness of scientific thinking, he told me about the dangers of Artificial Intelligence (AI) and how it would lead to mass unemployment. Predicting that AI would replace human intervention in India’s call centers, he estimated that about 70 lakh people would be rendered jobless.

60 crore in Mahakumbh? It's all hype with an eye on UP polls, asserts keen BJP supporter in Amit Shah's constituency

As the Mahakumbh drew to a close, during my daily walk, I met a veteran BJP supporter—a neighbor with whom we would often share dinner in a group. An amicable person, the first thing he asked me, as he was about to take the lift to his flat, was, "How many people do you think must have participated in the holy dip?" He then stopped by to talk—which we did for a full half-hour, cutting into my walk time.

A conman, a demolition man: How 'prominent' scribes are defending Pritish Nandy

How to defend Pritish Nandy? That’s the big question some of his so-called fans seem to ponder, especially amidst sharp criticism of his alleged insensitivity during his journalistic career. One such incident involved the theft and publication of the birth certificate of Masaba Gupta, daughter of actor Neena Gupta, in the Illustrated Weekly of India, which Nandy was editing at the time. He reportedly did this to uncover the identity of Masaba’s father.

Patriot, Link: How Soviet imbroglio post-1968 crucially influenced alternative media platforms

Adatata Narayanan, Aruna Asaf Ali Alternative media, as we know it today in the age of information and communication technology (ICT), didn't exist in the form it does today during or around the time I joined formal journalism at Link Newsweekly as a sub-editor in January 1979. However, Link, and its sister publication Patriot, a daily—both published from Delhi—were known to have provided what could be called an alternative media platform at a time when major Delhi-based dailies were controlled by media barons.

Breaking news? Top Hindu builder ties up with Muslim investor for a huge minority housing society in Ahmedabad

There is a flutter in Ahmedabad's Vejalpur area, derogatorily referred to as the "border" because, on its eastern side, there is a sprawling minority area called Juhapura, where around five lakh Muslims live. The segregation is so stark that virtually no Muslim lives in Vejalpur, populated by around four lakh Hindus, and no Hindu lives in Juhapura.

Martyrs’ Day at Sanand: Remembering Vinod Kinariwala amidst politics of remembrance

I was urged by a close relative, considered across my family as a binding force, to attend a grand ceremony on Martyrs' Day, March 23, along with four other relatives. The event, called Veeranjali (homage to martyrs), was to be held in an open space near Sanand town, about 15 kilometers from Ahmedabad. Martyrs' Day has been observed across India since independence, as it was on this day in 1931 that Bhagat Singh, Sukhdev, and Rajguru were executed.

Caste, class, and Patidar agitation: Veteran academic 'unearths' Gujarat’s social history

Recently, I was talking with a veteran Gujarat-based academic who is the author of several books, including "Social Movements in India: A Review of Literature", "Untouchability in Rural India", "Public Health and Urban Development: The Study of Surat Plague", and "Dalit Identity and Politics", apart from many erudite articles and papers in research and popular journals.

Search This Blog