Global CIO: Patni Latest Outsourcer To Buy U.S. Capacity

The recession offered a good chance to buy up capacity for business processing, software development, data centers.
Selling U.S. operations to outsourcers this way looks like a new wrinkle out of this recession. In the last recession in 2002, when many companies turned to IT outsourcing in a big way for the first time, it was more common for companies to try to simply have their employees go to work for the outsourcer, handing over an operation for an outsourcer to run. (Sometimes dubbed the "your mess for less" strategy.) It worked for a few, but many struggled, since the deal only made economic sense if the outsourcer could run the same operation cheaper. Doing that generally required offshoring ever-more work to get labor savings.

This model's different. Yes, Patni thinks it has knowledge and technology to run a BPO operation more efficiently and thus take costs out. More importantly, it'll spread those costs over more clients, using El Paso as a base to serve many customers. So instead of a 100-person BPO operation the healthcare provider runs, Patni expects to employ 250 to 300 people in El Paso, serving several industries and offering a mix of services.

"We're trying to move away from a labor-based supplier of services to one that's tech-based," Lakhanpal says. That will mean providing cloud-based services, using its intellectual property to drive down BPO costs, and offering new services from the facility.

We're seeing moves like Patni's expansion in the U.S. and Latin America because CIOs have become highly discerning consumers of IT outsourcing, many with a decade of experience behind them now. They know what work they want done nearshore to allow better communication, what data they want kept domestically, and when location doesn't matter.

Selling a U.S. operation to an outsourcer fits today's business pressure for IT to be less capital intensive, loading more into variable or operating expense. It's a bold move, since there's almost no practical way to unwind it. But look for more companies to try to make it.

Global CIO small globe Chris Murphy is editor of InformationWeek.

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