Indian Firms Outsourcing to Mexico

In an interesting twist, Tata is moving operations to Mexico because the cost of labour is becoming too high in India.

The increasing cost of labour in India is forcing the country’s largest software services provider to hire 5,000 employees in Mexico.

Tata Consultancy Services (TCS), which opened a software development centre in Guadalajara, Mexico, last week, will outsource the first 500 jobs from India in this financial year. A further 4,500 jobs will follow over the next five years.

A talent supply crunch in the booming services sector in India, coupled with a sharply appreciating rupee against the dollar, is threatening to knock the country off its perch as the world’s leading outsourcing centre.

“We see costs rising in India and people becoming less available,” Gabriel Rozman, president of TCS in Latin America, Spain and Portugal, said. “That’s why we’re going to places like Latin America, which has professionals and reasonable costs.”

Mexican salaries are up to half those in the United States, where TCS employs about 12,000 people. In addition, more than half of the group’s $18 billion (£9.03 billion) revenues come from the US and having a centre in the same time zone means that its pro-grammers can service customers more quickly.

That's how globalization is supposed to work.