International Business Opportunities

US officials have written to nine Indian firms based in the US, asking them to account for their workforce, and explain how the visas were granted.
The US authorities are concerned that the Indian companies are trying to avoid hiring skilled American workers.

US authorities grant a total of 65,000 temporary working visas every year. (see H-1B Visa Now Just a Critical Tool for Indian Outsourcing Vendors)

However, in recent months, the US has become concerned that many companies are bringing over lower-paid Indian workers at the expense of the more expensive Americans.
In the past few years, the US has been urging India to open up its own economy to American businesses.
Many US companies have come to India, lured by the fortunes of firms that have flourished because of the strength of the Indian economy.
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source: BBC)

According to Gartner’s IT sourcing group, Indian service providers set their sights on European countries as key areas for growth. […]

To avoid losing out to this new breed of competition, Gartner says that continental European service providers should revamp their strategies to encompass global delivery and service industrialisation. […]

Some issues must be resolved before Indian companies can truly compete on a level playing field: “These Indian offshore providers are recruiting staff in the European markets they sell into; not just sales staff, but consultants, project managers, engagement managers and, in some cases, personnel to staff their new near shore delivery centres” said Ian Marriott, vice president of research for Gartner’s IT sourcing group.
(Source)

“China accounted for more than 60 percent of Japan’s outsourced software trade in 2006 and has become the country’s biggest software outsourcing base,” said Mine Shentaro, of the Japan External Trade Organization based in Dalian, China’s Liaoning Province. […] “More than 60 percent of China’s software trade is Japan-oriented,” said Jin Guowei, deputy director of Dalian Information Technology Bureau. […]

According to a government plan for the development of software and information services, China aims to generate 168 billion U.S. dollars from the software sector and export 12.5 billion U.S. dollars worth of software services in 2010.

Noshiro Yasuo, president of Fujitsu System Engineeering Co., Ltd in northwest China’s Xi’an, said:
“While European and American companies are choosing India as an outsourcing base, Japanese firms prefer China because we are close neighbors and have similar cultural backgrounds.“

The H-1B visa law, championed as a way to attract the world’s best and brightest to America to study and work, allows skilled, specialized foreigners to work in America for up to six years and then pursue permanent residency.
The International Herald Tribune points out how the H-1B visa is now being put to a starkly different use.

The newspapers says:
“It is now a critical tool for Indian outsourcing vendors to gain expertise and win contracts from Western companies to transfer critical operations to places like Bangalore.” […]

According to a tabulation of U.S. Labor Department statistics, eight of the 10 largest H-1B applicants last year were outsourcing firms with major operations in India.

The newspapers explains:

“To deliver the solutions from a remote environment, Indian outsourcing vendors need a certain number of people being with a customer, understanding his needs and collecting the requirements.[…] They simlpy need a link between the people who are doing coding in India and the client”.
Indian outsourcing vendor Infosys had 6,800 U.S. employees on H-1Bs as of last September. In 1998, the figure was 231.

Japan and Chile have signed a free trade deal which will lower tariffs on a range of goods including cars, copper, fish, tea and wine.

The agreement, which is the first of its kind between Japan and a South American country, will reduce tariffs on the majority of goods traded by the two countries.
But it will not extend to farm products such as rice, which Japan is keen to protect.
Read more…

According to a study released Thursday by consulting firm A.T. Kearney, the financial advantages of outsourcing to destinations such as India and China will dry up in the next 20 years. That because of rising salaries and other cost increases in such emerging markets.

The study explains how wage and price inflation in offshore locations is already eating into the savings enjoyed by American companies that outsource technology and back-office work and will continue to do so in the coming years.

Average wages for programmers in India, China, and Eastern Europe rose between 20% and 40% on average in 2006, compared with U.S. increases of between 5% and 10%, according to the study.
(full story)

Amid fears of inflation and problems for financial institutions, China’s government has announced new measures to make it tougher for foreigners to invest in China’s property market.

The new rules will ban foreign firms and individuals from buying homes that they do not intend to live in.

They must have lived in China for at least a year before qualifying to buy housing and property under their own name.

“Though there has always been a claim that foreign capital pushes up prices, both the government and research department lacked detailed data on this so the name register will give a clearer picture”, said China Merchants Securities analyst, Yu Zhiyong.

China has already banned the building of luxury homes on new land to make affordable property available to poorer families and its central bank is tightening scrutiny on lending to limit “excessive investment and loans growth” (source: BBC.co.uk)

A survey carried out in Australia found that Australian manufacturing companies will slash at least 30,000 jobs this year as they move to relocate more work offshore. The study was conducted by the Australian Industry Group, on a sample of 800 manufacturers and 200 chief executives.

The Australian Industry Group chief executive, Heather Ridout, said:

“Last year we lost 30,000 jobs in the industry. This year we estimate another 4 per cent, which means roughly the same amount will be lost again.”
He added: “It’s going to happen in the future at an accelerating rate and there’s not an awful lot the Government can do about it”

About the main causes:

- A boom in commodities prices is radically reshaping industry, making it harder for manufacturers;

- A high dollar has made manufacturing exports more expensive for foreign buyers, while making it difficult for manufacturers to compete with a flood of cheaper imports;

- China, with its extremely low labour costs, has transformed itself into the world’s manufacturing hub.

As a consequence of that, a third of manufacturers is very concerned about the future of the industry and would plan to make greater use of offshore outsourcing. ( source )

Not surprisingly, many Americans who are employed in the IT industry have been coming to India for years; it happens that they have to manage subsidiaries or train Indian workers. However, what happens now with the younger is a different story.

A small but growing number of young Americans, college and business school graduates, are now moving to India to launch businesses, study globalization or for interning in one of the world’s fastest-growing economies.
Nasscom, India’s National Association of Software and Services Companies, estimates around 800 Americans are working or interning at information technology companies in India, and the number is expected to grow.

Americans must face the hassles of daily life in India and generally accept lower salaries to work there, but to be part of this historic economic expansion and the chance to know the Indian culture, is priceless for them. India’s economy has grown at more than 8 percent over the past three years, driven by the rapid expansion of its software, IT and business-process outsourcing industries.

Unlike China, English is widely spoken in India, making its culture and career opportunities more accessible to foreign workers.
Bangalore, metropolis of more than 6 million, it is known as India’s Silicon Valley and is seeing breakneck growth, with an explosion of new office towers, technology parks, condo complexes and shopping malls. (Source)

Indian NASSCOM and Dutch CBI have jointly announced an agreement which would make available to European small and medium-sized enterprises (SMEs) the benefits of business process outsourcing to highly specialised companies in India (BPO).

BPO, covers activities such as call centres, finance and administration, data processing, research, back office processes, human resource management and many others.
As many SMEs are not able to take advantage of BPO, the agreement aims to help them formulate exactly what their outsourcing demand is and to help them locate a perfectly matching partner in India.

CBI - an agency of the Dutch ministry of Foreign Affairs, leading centre of expertise in Europe in the area of trade with developing countries, will help European SMEs recognise the huge advantages of business process outsourcing. It will also assist them in finding reliable partners who understand their needs in India and other outsourcing destinations.

NASSCOM - National Association of Software and Service Companies, the largest and most important trade body for the Indian IT and

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