IT Outsourcers In India Step Up Contingency Plans,
June 13, 2002.

IT outsourcers in India have ramped up contingency plans to manage critical business-function risks as the tense political situation continues between India and Pakistan.

Some, such as Cambridge, Mass.-based Sapient, have called back 30 of its 60 expatriates working in its New Delhi offices to the United States, following recent heightened risk warnings for Americans in India from the U.S. State Department.

Most IT outsourcers in India, however, employ local talent. And while any negative effect upon business has been minimal up to this point, American companies probably won't be rushing into India anytime to negotiate IT outsourcing contracts.

Jeroen Tas, president of MphasiS, a software and system outsourcing integrator with offices in Santa Monica, Calif., and Bangalore, India, said four or five customers have postponed visits to India and decisions about outsourcing projects. Still, the feedback from existing customers has been positive, he said.

"We assume [nuclear war] is not going to happen," said Tas. "But we've been proactive, and it's a very important exercise to address how to maintain the continuity of business so should something happen, we are prepared."

Christine Ferrusi Ross, analyst with Forrester Research, said she is hearing from companies the same reservations about outsourcing work to India in such a volatile climate.

"If you weren't already in the pipeline to be a client for one of these firms, however, you are probably going to rethink your position at this time," said Ross.

At the same time, Ross said India most likely will remain a preferred destination for IT outsourcers because the country's long-standing infrastructure is still the best prepared to handle it.

Sapient reports business is "proceeding normally in India," according to a message to clients and business partners posted on the company's Web site. The message details data backups daily and data shipments biweekly to the United States. Contingency plans for each client engagement are being implemented, as well as a response plan to ensure the safety of Sapient employees in the event of an emergency, according to the message.

The plans will enable Sapient to work on its projects with minimal disruption should a conflict erupt, said a company spokesperson.

Tas said most companies had already accelerated efforts to develop contingency plans following the Sept. 11 terrorist attacks. Businesses in locations all over the world--not just India--are facing a new, higher-risk reality, said Tas.

"If you are working in Manhattan, probably the risks are higher than in Bangalore," said Tas. "There will be impact here [in India], but we don't think it will be long-term unless a nuclear war happens. And the likelihood of that is very, very low."