Shoma Bhattacharya (not her real name), a chartered accountant who has relocated from Mumbai to Chennai with her family a year ago, is looking for a suitable job opening, preferably with a multinational. In between interviews, she stumbles on a team of CAs that's in the process of starting up a company to offer outsourced accounting services to overseas clients. Soon she's on board as a partner, and today runs a team that offers statutory reporting and tax filing services to US clients. "Right now I make just about as much money as I would have working with an MNC," says Bhattacharya.

We're still in Chennai. Office Tiger, a New York-based research provider, is steadily ramping up its India team, which offers research and financial analytics services to six of the top 10 global investment banks. Today, it employs 200 management graduates and CAs and another 400-odd graduates and post-graduates.

A few 100 kilometres away in Bangalore, the world's largest vehicle-maker, the Detroit-based General Motors, is working furiously to get its export- oriented R&D centre up and running by June. The centre has been conducting mass-scale recruitment of engineers, scientists and MBAs to fulfil its ambitious plan of outsourcing design to its captive unit in India.

And you thought outsourcing is just about common-or-garden call centres filled with just-out-of-school kids drawling in heavily-accented baritones! Slowly but surely, a clutch of multinationals in the financial services and manufacturing space is making that big leap towards high-end outsourcing, or "domain intensive" outsourcing. For starters, these firms employ professionals who are qualified or trained in a specific domain. They are slowly moving out of the hourly costing model. And, finally, they are slowly turning the vendor relationship with the client into a partnership. In manufacturing, this movement is restricted largely to captive units of MNCs, which will eventually create ground for third parties. But in financial services and pharma, the third party phenomenon has already begun to take shape.

The R&D hub expands GE's capabilities, accelerating delivery of advanced technology to global customers Guillermo Wille/Managing Director/ John F. Welch Technology Centre

Financial Services Lead The Way

On the sixth floor of Chennai's Spencer Plaza complex is Office Tiger's India office. Over 700 people are absorbed in providing services like financial analytics, research support and desktop publishing for global investment banks. Co-CEO Joseph Sigelman, a former investment banker with Goldman Sachs, says: "In the next couple of months, we will be adding two more clients to the existing six." Sigelman expects to employ 1,000 professionals by December this year, who will help him continue shaving 50 per cent of his clients' costs via his services.

In Chennai (again!) another mammoth captive outsourcing programme plays itself out in the form of Standard Chartered's wholly-owned subsidiary Scope International, which services 50 countries in which Stanchart operates. Scope offers high-end services that can be broadly classified into wholesale banking, forex and money market transactions on the treasury side, along with financial analytics. The Chennai centre also provides the backend for derivatives transactions across markets. "30-plus per cent of the work we do at Scope is high-end and we easily reduce costs by 40-50 per cent for work outsourced from developed countries," says Romi Malhotra, who heads Scope International in India.

Meantime, investment bank J.P. Morgan Chase is firming up plans to set up an offshore research department in Mumbai. In a recent press interview, Nick O'Donohoe, J.P. Morgan's Global Head of Research, has said that the "aim is to shift responsibility for tasks like data collection, basic financial models and number-crunching. This strategy, he adds, will be "driven by the ability to go offshore." And Ernst & Young, which processes the filing of US tax returns in India, "could even outsource audit to India," says E&Y India Partner Farokh T. Balsara.

Manufacturing Joins In

The latest feather in Bangalore's cap is gm's upcoming R&D centre. The auto company is busy adding the finishing touches to its technical centre (at the International Technology Park), which is slated to go live next month. The centre, which will focus on engineering and research and development work to support gm's global portfolio, is currently on a recruitment spree.

Third-party outsourcing is also beginning to happen in manufacturing. Take the case of Ingenero, a small venture-funded company based in Mumbai. Ingenero's team comprises engineers and post-graduates in chemical technology, who monitor the efficiency of chemical process plants thousands of miles away on a real-time basis, from their office in central Mumbai. "We find that the only way to beat commoditisation is by acquiring domain expertise," says Gopal Jain, Director, View Group, the fund that has financed Ingenero.

Biocon subsidiary Syngene offers drug discovery services-think of it as a R&D BPO Kiran Mazumdar Shaw/Managing director/Biocon

Offshore outsourcing, however, is still dominated by the captive units of MNCs, among which is the McKinsey Knowledge Centre in Delhi. The centre, which employs at least 100 consultants and research staff, has actually taken over from McKinsey offices that were providing research support from Brussels and Boston.

Don't Forget Drug Discovery

Soon after Jignesh Bhate, Head of Idea2solution, an incubator founded by the promoters of Dr Reddy's, decided to set up a life sciences discovery services company last year, he formed a JV with the Institute for Infocomm Research, Singapore, called Molecular Connections. Leveraging the Singapore company's proprietary technology in the area of target identification (a key step in the drug discovery process), Bhate approached clients with a simple proposition: a 50 per cent reduction in turnaround time.

Another third party provider in the drug discovery area is Syngene, a subsidiary of Bangalore-based biotech firm Biocon. MD Kiran Mazumdar Shaw has an interesting take on the cost proposition. "It's only when outsourcing moves up the value chain that greater cost reduction actually takes place for the client. A PhD in India costs about $60,000 per annum, in the US its about $250,000 per annum."

Clearly, the employment boom is shifting from semi-skilled labour to qualified professionals like CAs, engineers, scientists and MBAs. More importantly, this climb up the value chain might finally help India transit from the "low cost" to "high value" proposition.