From: Baroni Limited [Baroni-Limited@tiscali.it]

Sent: 05 July 2007 19:55

Subject: Baroni Limited - Offshoring Newsletter' - 20/07

Sensitivity: Confidential

‘Attrition rates in India are overblown’ - Says Sandeep Arora Lead Executive of Accenture Delivery centre.

Four years ago, he moved from the US to take over $16.65 billion Accenture’s technology operations in India. In these four years, Sandeep Arora has overseen growth of the Indian operations that will be 35,000 people (largest outside the US), by August this year. “We have grown from standing still,” says the lead executive for Accenture’s Delivery Centre for Technology in India. In a freewheeling conversation with Rajesh Menon, Arora speaks on how this multinational giant has been able to leverage on India’s strength and is facing competition from Indian players. He also dwells on how wage increase is a concern and what companies should do to offset it. Excerpts:

How is India helping Accenture to compete in the global scenario?

What is happening on the map of the world is that you need to understand local market and the nuances of the local market. You need to understand the CEOs, CFOs, CIOs and you should be able to step into their office and say you will take over their operations and deliver 20% in cost benefit. You have to sign those outcome deals. What India does is to provide us scale to deliver those prices in a cost competitive manner. It is no longer whether you can provide me 100 people. It is really about business outcomes and global footprint. Two, three, four years ago the name of the game was who is going to provide me people at quality pricing. We have had conversations with a number of clients and clients are getting tired of that model. That value has already been squeezed. Can you deliver business outcomes and that has been our heritage? That has been our sweet spot, delivering business outcomes.

Today, India is one of the largest geographies for Accenture worldwide. In terms of headcount, we will be 35,000 people by August 31 from 27,000 people as on January 31. We also have several centres of excellence, including life sciences that are building assets and prototypes for our global clients to leverage. We serve over 1,000 clients worldwide through our global delivery network of which more than 300 clients, including Fortune 1,000 companies, are served through our 11 delivery centres in Mumbai, Bangalore, Chennai, Hyderabad, Pune and Delhi.

When you speak about scale, don’t you think that wage increase and high attrition levels hamper profitability of companies?

I think the attrition rates in India are overblown. If you go to any other country, the attrition rates are in double digits. As far as we are concerned, without getting into the numbers, we are doing very well from the attrition perspective across all spectrums. I think we need to set that aside. The cost and salaries are definitely going up, but it is purely value. It is a value-price performance difference. It is beneficial to work here (in India). Now, will that disappear? If salaries continue to rise 15-18% year-after-year then at some point every person in India will make more than Bill Gates. At some point the straight line cannot continue, it has to level off. The other thing is that as people are able to command higher salaries, we as a company have to offset that by delivering higher value. So, you have to be able to take on higher complexity work that will offset higher salaries. Price is being offset by innovations and as the business gets larger it offsets some of the salaries. A lot of companies are also focusing on innovation and India clearly has the potential to become an innovation hub purely because of the live environment it has to offer.

Do you think Indian companies have been able to take on higher complex work?

Now, Indian companies are very strong and are doing well. That is what they would like to do and they are working towards it. But it will take some time.

There are rumours in the market that you pay much higher salaries than your Indian competitors to wean away talent from them. How far is it true?

When we were starting around 2001, we wanted to hire some senior people. Naturally, you have to pay extra to attract them. At this point of time, we will be silly to pay extra. We don’t (pay extra). In terms of business, we go head-to-head with Indian pure plays and we are head-to-head price competitive. We cannot do that by paying extra. We are not a captive company, because if you are a captive company, you have to pay extra. The reason is you don’t have a brand and you are hiring people for a certain position.

Do you think that US senators’ stand on H1-B visa and the ongoing rhetoric on anti-outsourcing would lead to a slowdown in outsourcing to India?

This is the same discussion and rhetoric that took place during 2002-04. What has changed from 2002-03-04 to now is that earlier the companies were a bit reserved about letting it be known that they were offshoring. I think in the past couple of years that has being washed away. We ourselves have announced that India will be the largest geography for Accenture outside the US.

Article published in Financial Experess India.

 Top Stories

Offshoring 'saves £1.5bn a year'
Chris Gentle, associated partner for financial services at Deloitte and author of the study, said: 'Offshoring is maturing at a rapid pace but, in future, the best off-shoring strategies will not, and cannot, be based on labour arbitrage alone. Offshoring staff saves the UK financial services industry around £1.5 billion a year, it was claimed.

UBS Outsources To India And ... Poland?
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PAREXEL Expands Clinical Research Services and Data Management to Hyderabad, India
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UK Hedge Fund Puts $91 Million In US' Northern Trust
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Goldman Sachs Outsources Luxembourg Fund Services to Bank of New York
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Epoch Investment Partners Selects Mellon Financial to Provide Back ..
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Wachovia to open offshore call centre in Philippines
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YES Bank to get into knowledge processing, planning for captive BPO
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Rockwell Collins to add 300 jobs in India operation
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 Service Provider News

Blackstone set to acquire HDFC-Barclays JV Intelenet for $200 million
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Citigroup reported to be in talks to divest BPO arm Citigroup Global Services
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Accenture Reaches Multi-year BPO Contract With Washington Gas
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Ascent Systems Establishes Tech Centre to Counteract Offshoring
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T-Systems wins EUR 20M network deal from Bosch in Asia
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Genpact acquires Axis Risk Consulting
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SAP plans to acquire small Cos in India
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