Infosys: Riding the BankAm wave?

Globalization continues to be bad news for the Americans. The peak of the
outsourcing mountain may well be within the Indian global corporation’s reach.
If a March 17 CNN report quoting the Wall Street Journal is to be believed, the
Bank of America - fresh from its $ 48-billion all-stock buyout of Fleetboston
Financial Corp, will outsource upward of 13,000 jobs (read laying off 13,000)
from the US, as a function of the merger. Advantage Infosys?

Now, the grapev-ine claims that at least 6,000 of the 13,000 lopped jobs
(eight percent of BankAm’s total workforce) are being outsourced to Indian IT
services titan Infosys Techno-logies. This could be a humongous byte of the
outsourcing pie.

When contacted, Infosys declined com-ment on specific cli-ent contracts.
Besides, the company did not confirm or deny any upcoming contract with the Bank
of America, a longstanding client. However, a banking source told Dataquest that
such a contract, if it has fructified, would be among the biggest outsourcing
projects bagged by an Indian IT services company.

Since 2002, BankAm has strategically aligned with Indian IT services leaders
TCS and Infosys, as well as global outsourcing services giant Accenture, to
deliver application maintenance and development services to the company’s
internal information technology groups. Sources say it’s but natural that the
bank would leverage on its 38-year-old presence in India by further pursuing the
services of a tried-and-tested ally like Infosys.

BankAm’s penchant for cost-effectiveness in processes is well known, with
its traditional emphasis on streamlining ‘process, people and technology’.
But it could well be bracing up for the backlash in the US over the next few
months. BankAm is said to be facing considerable public opprobrium in the US for
its outsourcing ways since 2000, when it outsourced 9,000 jobs.

Last month, BankAm announced that it would set up an Indian subsidiary,
Continuum Solutions in Hyderabad, for back-office operations with 1,000
employees by the middle of 2005. Continuum is part of BankAm’s Global Delivery
Center of Expertise (GDC), created in 2001 to enable its internal techno-logy
organizations to deliver faster, less expensive and bet-ter software solut-ions
by accessing the global capabili-ties of key strategic partners.

With the finan-cial services out-sourcing market estimated to touch $ 50
billion by 2006, analysts see the onshore to offshore business process ratio
widening. Am-erican Express, with an onshore-to-off-shore ratio of 40:60 sees it
becoming even 20:80 in the future. BankAm has not made its views clear on the
subject; the Indian IT services sector will undoubtedly cash in on the action.

And, as elections in the US loom around the corner, American websites are
dripping vitriol: "Remember to lay off the idiot king in Novem-ber,"
says a writer on a popular website’s message board, referring to US President
George Bush.

The anti-outsourcing brigade could have more shocks lined up. US banks,
brokerage firms, insurance companies, mutual fund and other financial services
firms are planning to relocate more than 500,000 jobs offshore, representing
eight percent of their workforces, over the next five years, according to a
study conducted last year by management consultancy AT Kearney.

Ravi Menon

(CyberMedia News)