Think Global, Outsource Local

Wipro Technologies, one of India’s largest outsourcing firms, bought Infocrossing, a U.S.-based infrastructure-management company, earlier today for about $413 million. The deal highlights the way the outsourcing industry is changing: While companies used to be able to make a clear distinction between Indian outsourcing companies and U.S. ones, that line is rapidly burring.

The deal is one of the largest overseas acquisitions ever made by an Indian outsourcing provider. (You can read the Journal’s take on the deal here.) Infocrossing has five datacenters and approximately 900 employees, all in the U.S. The acquisition immediately gives Wipro a strong U.S. presence, Sudip Nandy, Wipro’s chief strategy officer tells the Business Technology Blog. Nandy says that Wipro also intends to “grow organically” in the U.S.

Nandy says that the deal should help Wipro attract customers who aren’t comfortable outsourcing work to foreign countries like India. “We think [the acquisition] helps us address customers’ perception of risk,” Nandy tells this blog. “Now we can offer a range of services from datacenters in the U.S.” Nandy also says that the move is well timed since opposition to offshore outsourcing usually picks up around elections, as politicians try to win votes by speaking out against the practice – and the 2008 presidential campaign looks like no exception.

The acquisition also illustrates the way the outsourcing market is evolving. A few years ago, companies had an easy-to-understand choice when it came to outsourcing a technology project: Send it overseas to a low-priced Indian company, or keep it in the U.S. by giving the project to a company like IBM or Accenture. But the big American companies have grasped the benefits of doing work in low cost countries; Accenture now has more employees in India than in does in the U.S., and IBM has grown its Indian operations by a factor of ten over the last five years. And now that Indian companies are coming to the U.S., the line just got even blurrier.

In other words, finding an outsourcing provider is no longer an issue of choosing an Indian company or an American one. They can all do the work anywhere. It’s about choosing the right company and the right location for your business.