KEY POINTS:
For those IT professionals worried their job may be outsourced to some vast code factory in Bangalore or Bombay, don't worry. That's not how it works in this part of the world, according to Mukul Agrawal, the managing director of Unisys Global Services India.
He says there is
minimal cost advantage for New Zealand firms to have work done in India, given the wage structures, but between 5 and 6 per cent of his division's work comes from Australia and New Zealand.
"From what I can see here, outsourcing has more to do with not having enough skilled people here. That is what you look for in global resourcing. It is not so much about moving jobs," Agrawal says.
"In Australia and New Zealand, the issue if the Asia Pacific economies are growing faster, so there is a shortage of talent," Agrawal says.
"Some cost containment comes with the package, but that is not the primary driver."
In fact, New Zealand is well placed to benefit from the outsourcing frenzy sweeping corporate America and Europe in search of what is euphemistically called cost containment.
Agrawal says Unisys is setting up a "near shore" business here.
Work could be done here on projects for clients from Australian, New Zealand and wider afield, with staff sometimes working in teams with the others from India and other Unisys locations.
Agrawal says it's about being able to offer customers an "a la carte" service, ranging from doing the work on the customer site to having it done on the other side of the world, depending on customer preference.
"We have put New Zealand on the menu," he says.
The fact New Zealand's markets open first in the world is a factor, given the weighting in Unisys's client list towards the banking and finance sector.
He says some skills, such as high-end systems architecture or working on Unisys mainframes, are more likely to be found here than in India.
Outsourcing of IT software development and IT-enabled services, made possible by the global internet, is having a profound effect on the corporate sector and on the prospects for the middle classes in the developed world.
Companies can get work done cheaper somewhere else on the planet, and they can push down the wages of comparable IT professionals in commuting distance of their offices.
Business Week has found that between 2001 and 2005, starting pay for computer science and engineering graduates declined about 12 per cent.
Unisys was late to set up its Indian offshoring operation, with the Bangalore-based global services centre only opening two years ago. However, Agrawal says the firm is no stranger to India, and 25 years ago had a joint venture there with services giant Tata.
The joint venture was wound down 10 years ago.
Agrawal says his Bangalore centre has ramped up rapidly to make up for lost time.
The centre already has 1100 staff, and Agrawal says he is aiming for 1500 by the end of the year, and 4000 by 2008.
By then Unisys intends to have a total of 6000 people in its global services division spread across, Bangalore, Budapest, Shanghai and other centres.
"The competition for talent is fierce," Argrawal says.
While the first few hundred staff had to be poached from competitors, Unisys is now recruiting and training a lot of staff straight from universities.
Agrawal says with one million IT professionals and two million university graduates a year, India has a deep pool of labour to draw on.
He says much of the success of India's outsourcing boom is due to the forethought of central and state governments, particularly in tax treatments and in working with the education system to ensure a skilled workforce.
Less than a third of the staff are in the call centre. The rest are in software development, the operational area such as managing servers and networks, in technical support and in business process analysis.
Much of the work being done in outsourcing centres such as Unisys is maintaining existing applications and customising modules for package applications.
"Not many people are building large applications, but people don't want to get rid of the applications they do have so they need people to make small enhancements and provide support," Agrawal says.
He says mainframe computing is now a small part of the workload.
"A lot of the work going forward is on standard open systems, Unix and Windows."
Agrawal says outsourcing is now creating the demand for new skills in developed markets.
"Working across the world is complex, so managing offshoring of projects becomes a core competency.
"Unisys is based out of Pennsylvania, so we are working with Pennsylvania State University to train students how to manage offshoring," he says.
