Offshore Outsourcing — What Happened To India

India got hammered in a flurry of articles and posts all named something like: “The 25 Most Dangerous Cities for Offshore Outsourcing.”  What happened?

India has been the destination for a long time.  Sure wage pressures have been turning those mindlessly seeking the lowest expenses elsewhere…  But India has been hot.  A critical mass of its population is smart, adaptable, and ever ready to take on the hard programming and operations work that gushes in from around the world.  A critical mass of Western business influencers and decision-makers have had some difficulty, though, internalizing that cultural differences in India can materially influence the overall corporate risk pool when they are not effectively integrated into corporate risk management processes.

Cultures where intellectual property and digital information are conceived of differently than, for example, the Mid-Western United States, can be a challenge for U.S. businesses.  When corporate policy and control frameworks were created and tuned for local application, their extension across cultures is not often a good fit.  When the risk issues relate to elevated risks are primarily focused on sensitive information, polity and control “fit” matters.  My experience has been that U.S. financial services corporations exhibit very different behaviors when dealing with this situation.  Some appear to understand that risk management practices need to remain relevant across their operations, and that might mean investing in different ways in different cultures.  Others do not.

So, what about that report last week?  The Brown-Wilson Group’s report “2009, The Year of Outsourcing Dangerously” has spauned a relatively huge tribe of articles and posts about “The 25 Most Dangerous Cities for Offshore Outsourcing.”  Brown-Wilson’s survey identified 10 cities in India that made their list of “The Riskiest 25.”

Delhi/Noida/Gurgaon, Mumbai, Chandigarh, Pune, Chennai, Bangalore, Hyderabad, and Kolkata were all characterized as members of “the 25 riskiest.”  They tended to score higher risk in the “Transnational & Geopolitical Issues,” “Terrorist or Rebel Target Threats,” and “Unsecured and Unprotected Networks, Infrastructure, Technology & Telephone” categories.  Pollution scores also drew some of these cities down as well.  It would be convenient to blame the recent violence in Mumbai, but the survey was completed more than a week before the attacks.

What is going on in the leadership circles making decisions about offshore outsourcing?  How do they reconcile input like that published in this report with behaviors that extend access to huge pools of sensitive information and valuable intellectual property to what some now say are the highest risk locations?  As we continue to invest in risk management strategies, plans, and tooling, we might need to step back and survey the key decision-makers in our organizations.  Are the risks associated with offshoring work integrated into their thinking and personal decision-making?  Unless we can make these risks real — and I am not convinced about this report’s conclusion that Indian locations ought to be so near the bottom — to our senior leaders, they may construct another “bubble.”  In the global financial services businesses, we don’t need another one of those…

— References —

The Brown-Wilson Group’s report “2009, The Year of Outsourcing Dangerously” :

Google search for Brown-Wilson and “The 25 Most Dangerous Cities for Offshore Outsourcing”:

UPDATE 02 March 2009:  That google search now return more than 2,000 strong hits.  For some reason, this theme has traction.


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