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Indian IT Company to Establish Unit in US Amid Western Concerns About  Outsourcing - 2004-04-11


One of India's leading software companies says it is establishing a consulting unit in the United States. The move comes in the wake of concern in Western countries over the flight of high-technology jobs to low-wage countries such as India.

Indian software company Infosys Technologies, Limited says it is investing $20 million in a Texas consulting firm in the United States. The company will hire about 500 employees over the next three years.

Infosy's is India's second-largest software exporter, and earns most of its revenues from the United States.

Nandan Nilekani, chief executive officer of Infosys, says his company is establishing development centers in countries stretching from Australia to the United States. He says the move is part of efforts to match global players in business consulting, and also to ensure that jobs are created in all markets where the company has interests.

"We anticipate that over the next three years there will be several hundred people hired by Infosys Consulting, predominantly from the local markets," he said. "And that is a strong statement that we are as much committed to the markets where we operate as much as creating jobs here [in India]."

There is a growing backlash in the United States and Britain over moves by global companies to cut costs by setting up service offices in developing countries where English-speaking, qualified people work for much lower wages. Several U.S. states have proposed legislation to restrict the practice known as outsourcing, and halt the flight of jobs.

Indian companies are anxious to counter that backlash and to continue benefiting from the trend of moving work overseas to low-wage destinations.

Global information technology consulting firms such as Gartner, Incorporated, say outsourcing will continue. They cite the example of computer giant IBM, which recently agreed to buy India's third-biggest business outsourcing firm, Daksh e-services Limited, for approximately $180 million. It is the biggest deal so far in India's technology services industry.

IBM has been a leader in outsourcing, mainly to India where it employs 9,000 technology professionals.

The Indian IT industry grew by about 30 percent last year, and is expected to continue growing at the same pace for several years.

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