Dell Pumps Up Indian Outsourcing Operations

Dell (Nasdaq: DELL) has indicated it will continue to expand its ties in the Indian outsourcing market, building on the contact center and R&D operations it already has established. Its most recent initiative? Plans to establish a customer contact facility in Gurgaon to complement its existing operations in Bangalore, Hyderabad and Mohali.

The 1000-seat Gurgaon center will start operating out of temporary headquarters sometime this year, and will move to a custom-built facility when it is completed.

Dell is also considering using India as a manufacturing site, according to CEO Kevin Rollins, who made the comments at a conference while visiting the country. India's domestic market growth is one reason Dell wants to build some of its computers there, he said.

"India currently sells four million computers per year, and this is projected to rise to 10 million units annually in the next three to five years," he told reporters. "Our workforce here is capable, and the time is right for the second phase of expansion in contact center activities, research and development and consideration of a manufacturing site."

Between the two new operations, Dell expects to add 5,000 new jobs to its Indian-based workforce, bringing the total number of jobs to 15,000.

Call Centers to Manufacturing

The announcement is yet another validation that India will remain the chief destination of U.S. corporate back- and front-office outsourcing.

The number of contact centers in Asia Pacific is expected to grow at a compound annual rate of 9.1 percent to reach some 39,247 facilities by the end of 2011, Frost & Sullivan recently found in its "Assessment of the Asia Pacific Contact Center Market."

"India is driving this migration," Frost & Sullivan analyst and report co-author Jared Carleton told CRM Buyer.

Another facilitator -- one that is gaining traction every year -- is the emerging trend of near shoring, Carleton noted. "Near shoring" refers to the practice of companies going offshore to outsource operations -- but to countries in closer proximity to their home bases. In Asia, Japanese companies are outsourcing manufacturing or customer service operations to China, while Australian companies are heading to India or the Philippines, the report found.

Poster Child

Dell has become a poster child for outsourcing, both for what can go right and what can go wrong.

It become a top tier computer manufacturer in large part through the development of its innovative supply chain in the 1990s -- then a novel, just-in-time operation that combined pushing more responsibility onto suppliers with outsourcing non-essential functions.

Later, though, parts of this strategy backfired when Dell felt compelled to bring back some of its technical support jobs from India to the United States due to customer complaints.