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Companies are increasingly moving from captive BPO centres to specialised third-party service providers. And companies like Symphony Services are benefiting. By Rahul Sachitanand Companies outsourcing a large chunk of IT work to India have often preferred to invest several million dollars in their own (captive in industry-speak) centres, rather than "risk" delegating work to third-party operators. With security a major worry for executives, a company-owned centre was assumed a safer option for an India presence. However, a recent survey by management consultancy AT Kearney has revealed that, if anything, several companies, especially those who were late to the India party, are plumping for specialised third party vendors to undertake software development work. The survey has revealed that in three years, captives will account for just a fifth of the market in terms of employment and 30 per cent in terms of revenue. Captives also have a longer gestation period, with many having to run for five months before closing their first hire. According to some estimates, third party vendors save nearly $6 million (Rs 26.4 crore) over two years for the development of a 100-engineer facility. While large multi-billion dollar corporations such as SAP and Oracle have been in the country for around a decade, others who have been slower in jumping on to the India bus, such as IT services vendor Sapient, or Autodesk have opted to send work to companies such as Romesh Wadhwani-promoted Symphony Services. "With an India plan becoming so critical, companies don't want to waste time and money with their own centres, when companies like us can do it cheaper and faster," says Gordon Brookes, President and CEO, Symphony Services. Cost is, however, just one of the parameters that companies consider, according to industry analysts. "In addition to pure labour arbitrage, companies outsource to gain flexibility, access to specialised skills and access to high-quality software development processes," argues Stephanie Moore, an analyst with Gartner. It isn't just low end testing and QA work Symphony undertakes, Brookes claims, adding that it's signed up with large commercial vendors such as e-business tools maker BMC, to undertake complete (or end-to-end in geek-speak) services. "We've found it beneficial to employ a hybrid approach to augment our offshore development capabilities," says Dayon Kane, Director and General Manager, Legacy Business BMC Software. " Brookes, meanwhile says several other factors tilt the balance towards India, most importantly the fact that India churned out 350,000 engineers in 2005, the US just 70,000. US Computer Science enrolments have fallen 19 per cent, as students perceive a shrinking market for these skills. Perhaps this decline is justified. McKinsey Global Institute has estimated that nearly half the total employment in the packaged software industry can be "sourced globally". Brookes believes that software vendors of today (who undertake a lot of coding in-house) will morph into hubs of "marketing, sales and ideation", similar to Dell in hardware, with coding duties left to specialists. While large Indian vendors are ramping up their headcount (Brookes sniffs at them as competitors, claiming his firm runs long-term engagements compared to their short-term projects), Symphony is building a Bangalore campus to house nearly 5,000 engineers to keep pace. The company's even taken over the development centre of a small company and is in talks to acquire several more, and plans to be a 10,000-plus employee firm over the next few years.
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