Outsourcing to India – Borg Warner drives into Outsourcing Arena

The low-cost country advantage continues. BorgWarner, the over $3 billion engine and drive train components manufacturer, is looking at Outsourcing more business, both in its core areas of manufacture and in the services field.

The company has identified three countries for conducting their Outsourcing business namely, Korea, China and India.

“We will set up, in the next six to 24 months, new business units in Thailand,” Timothy M Manganello, chairman and CEO, BorgWarner Inc, said. The company has a declared policy of getting additional $1.4 billion new business from Outsourcing to these low cost countries for the duration of year 20005-07.

Cynthia Niekamp, president and general manager, BorgWarner TorqTansfer Systems, part of Borg Warner’s drive train group, added that they visited the facilities of a major Indian software services company.

The visit was part of their aim to source services from India. “We want to increase purchasing from the LCC, which is now 15%, to 25%. This is on the manufacturing side,” Ms Niekamp said, indicating that services, including software engineering design, would be additional.

BorWarner has already entered a joint venture and a wholly owned subsidiary in Chennai and holds two joint venture companies in Pune. Divgi Warner, where BorgWarner holds a 60% stake, is a 10-year old JV. BorgWarner’s global acquisition of the German company Beru, has given it another JV in Pune while, BW holds a 70% stake in that company.

Priyanka. S

Outsourcing to India: GECIS bags a $24m order from global auto manufacturer

Pramod Bhasin, president and CEO of Gecis Global, the biggest Outsourcing firm in the country, announced at an investor conference recently that the company had bagged a $24m order from a global auto manufacturer.

In a bid to maintain its margins in a fiercely competitive business environment, Gecis Global, needs many more such deals. The company wants non-GE revenue to contribute 25-30% of the total revenues in ‘06, up from 1% in ‘04.
According to Mr. Bhasin, the non-GE business should deliver close to 50% of the company’s total revenues in the next three years.

Gecis registered revenues of $426 m in ‘04. It plans to clock about 25% growth to $525m in ‘05. This Outsourcing Company also, plans to raise its total headcount to 23,500. GECIS currently employs 17,000 people out of, which 13,500 are in India, 2,300 in Mexico and 1,100 in China. It also has 575 people in Hungary.

Mr. Bhasin did not comment on the current margins that the firm clocks every quarter. However, market estimates put them in line with other companies like TCS, Satyam at 25-30%. “Our margins are competitive and we not see any pressures on our margins in the immediate future,” Mr. Bhasin said. “Though call centers and customer service will remain important offerings for us, we are increasingly focusing high-end value-added services where we are able to command a lot of value and prices are not very elastic,” Mr. Bhasin told ET in an interview.

Gecis earns nearly all of its revenue today from US giant General Electric group, which owns 40% in the firm. The remaining 60% is held by private equity funds General Atlantic and Oakhill. This Outsourcing Company plans to list on stock exchanges over the next few years. Mr. Bhasin said that the company is focusing on creating vertical expertise and domain knowledge in industries like insurance and healthcare and tap revenue in Europe and China. Furthermore, he also mentioned that the Company serves a host of non-GE clients, which include companies in the Pharma sector, computer manufacturers, automobile, financial services, consumer products manufacturer, airline, consumer electronics and media.

Priyanka. S

Outsourcing to India – Reliance gears up for Outsourcing to other clients

The Reliance group is moving into business process Outsourcing in a big way. Reliance Infocomm, its telecommunications arm, is charting the strategy.

Reliance Infocomm has a captive Center, however, it now plans to extend Outsourcing services to customers outside the group. It intends to leverage its expertise and provide Outsourcing services in the areas of telecom, manufacturing and financial services.

When contacted, a Reliance Infocomm spokesperson said: "Reliance has always been of the belief that India has tremendous capability in the Outsourcing business, owing to the large number of knowledge workers in the country.
We believe Reliance can leverage its expertise in the telecom, manufacturing and financial services domain to provide outsourcing services to clients overseas. In the area of telecom services, typically, our expertise is not limited to customer service but extends to network outsourcing, process design and engineering, and customer relationship management."

"We expect the Outsourcing business to contribute significantly to Reliance Infocomm's revenues in the next three years," he added. According to analysts, the Reliance group itself has a large customer base and has built the requisite capability to service them.
With both the infrastructure and resources in place, it makes sense for Reliance Infocomm to expand its business and outsource to other clients. Other Indian business groups like the Tatas, Godrej, the Aditya Birla group and the RPG group already have a presence in the Outsourcing business.

Priyanka. S