Will Mumbai Attacks Impact Outsourcing?

By Laton McCartney

The 9/11 attacks, you may remember, triggered a surge of outsourcing as many banks, investment houses and insurance companies moved their backoffice operations from lower Manhattan to India.

Now, in the wake of what some in Mumbai are calling India's 9/11, the question is will that surge reverse itself, sending software development, business process outsourcing (BPO), and outsourcing back to U.S. shores, or perhaps to China?

Of course, much of the outsourced IT and BPO work in India is centered in Bangalore, Chennai, Delhi National Capital Region and Hyderabad, but there is substantial activity in Mumbai as well.

Bank of America has two outsourcing units in Mumbai. Giant consultancy Accenture has one of its global outsourcing and BPO delivery centers there. Three offices of Tata Consultancy Services (TCS) are located in Mumbai. BPO vendor Firstsource Solutions Ltd., which counts a number of major U.S. healthcare companies among its clients, is headquartered in the city of 18 million. Software service company Infoton, whose clients include HSBC Bank Ltd. Citigroup Global Markets India Pvt Ltd and Ernst & Young, also make it their headquarters.

Most of these companies operate in Mumbai suburbs far from where the attacks which targeted U.S. and British citizens occurred. As a result, the attacks have had little impact, they claim. As an example, on the first day of the terrorist assault, about 80 per cent of the employees of mid-tier company Hexaware Technologies turned up for work in the morning shift. "During the course of the day, this figure improved as employees kept coming in. Hence, none of our delivery operations were impacted," a Hexaware spokesperson told reporters.

Omnitech Infosolutions, which has its corporate headquarters in Mumbai, says its operations were not directly affected but those of some of its customers were. "We have various customers in and around downtown (Mumbai) to whom we provide IT technology services," Managing Director Atul Hemani told CIOZone by email. "Some of the clients avail our services onsite and many of them could not operate for a couple of days. Fortunately, all our clients, consultants and engineers are safe."

In a statement released to CIOZone, Tata Consultancy Services noted: "Almost all of the attacks took place in the South Mumbai area. Our assessment indicates that all TCS employees working out of our South Mumbai offices are safe. At present, all our business operations in South Mumbai and throughout Mumbai have commenced as usual, and are functioning normally. No customer projects were impacted by these events. TCS has very well established business continuity plans in place should the need ever arise to implement them."

NASSCOM, the global IT services, software developer and outsourcing trade association, has also put out a statement stressing that the attacks will not have a negative impact on business. "We will not bow down to terror. As an industry that is international and services customers across the globe, we continue our operations, uninterrupted, from centers across India and even Mumbai. Increased precautions are being undertaken to ensure the safety and security of our employees, facilities and visitors."

So it's back to business as usual, at least for now. The real test will come if tensions between India and Pakistan escalate.

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