MNCs selling off India offshore units
By siliconindia   |   Wednesday, 07 March 2007, 18:30 IST
Printer Print Email Email
New Delhi: Initiated by British Airways and followed by US conglomerate General Electric (GE), Multinationals (MNCs) are following the latest trend of selling off of their BPO units in the country. MNCs setting up offshore business units in India to cut costs are a passe as currently over two-dozen firms are evaluating sell-off options, including PC giant Hewlett-Packard according to Sudin Apte, head, Forrester's India, a global technology research firm. British Airways was among the first to spin off its Indian outsourcing unit, today known as WNS Holding, in 2002, the trend is catching up fast with global companies operating in India. US conglomerate General Electric (GE) sold off its outsourcing operations two years ago for about $500 million (Rs2,224 crore), London-based United Utilities sold its unit, Vertex, last year. The research shows most of the sell offs by MNCs are either to stem further losses or to focus on core competencies and cut costs at the same time. Apte feels if the size of a company’s own facility is small, up to 100 employees, then outsourcing actually becomes counterproductive, as savings in staffing costs are offset by management overheads. And if size is too large - over 3,000 people - the issues of people, processes and costs emerge, which are time consuming. The reason MNCs are looking for an exit route is that outsourcers are needed only for mundane and low risk tasks, and not for work that defines the core value of the firm, which they are more comfortable managing internally, the Forrester analyst said. Experts believe MNC’s captive centers do not make sense in most situations, as a captive facility is not an end in itself. For most, it’s a transient stage to go or expand on offshore.

siliconindia