Mergers and Acquisitions 2: Indian Offshoring

Some tricks that Indian offshoring companies adapt to boost up valuation just before recieving a dose of private equity or enter into negotiations are-

1) Build additional centers to make it look bigger

Make a small 50 member team size in East Europe, a 50 center team size in South America, a 50 member team size in China while 90 % of team stays in India. And claim we are present in one dozen countries so we have minimized location/ country instability risk.

2) Claim to invent the Indian Outsourcing sector when they first worked in 1990’s at McKinsey or Gecis or IBM.

Some companies claim to invent the KPO (knowledge processing) sector while some companies claim to invent the BPO sector.

The first apperance of the word Knowledge came from the back office McKinsey Knowledge center in 1990’s where almost all early recruits went and set up or joined other back offices- McKinsey continues to keep that centre as well as keep small teams in multiple outsourcing companies to gather information. It has the most secretive client relations and the best run alumni network in consulting companies.

recently McKinsey tried to aim for cloud computing by creating a market for private clouds rather than just clouds.

Who invented KPO or BPO or BTO? Even Wikipedia entries can be maipulated. Even Google SEO can be gamed by link farms

3) Becoming Bigger and Better pre infusion of funds

Increase staff size,

pay lower salaries,

lock attrition by bonds that prevent people from moving for two years ( yes it is not illegal in India)

Not pay overtime ( many companies keep detailed records to ensure minimum of 10 hours work from employees and spur unpaid overtime as this is not required by law for Indian outsourcing companies.

4) Create an industry wide database to keep private information on individuals thorugh the NASSCOM – the premier lobbying body for Indian ITES

Most of this is due to the rapid rise of Indian ITES as opposed to mature practises in Indian IT industry- even there it has been an occasional scandal like Satyam

Are you offshoring work to India? Do you know how many people are working how many hours to get that great job done? Do you wonder why only 1-2 senior members speak on a tele conference but junior team members dont.

Happy Outsourcing.

Jai Ho!

Author: Ajay Ohri

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