Germany Turns to Outsourcing
Germany Turns to Outsourcing
Germany Turns to Outsourcing
Though many German companies are finding it hard to operate due to shrinking margins and slow growth, many offshoring companies providing their services are witnessing a steady growth primarily due to an increasing interest by German companies in sending their non-core activities to offshore locations.
According to Debjit Chaudhuri, Head German Division, Infosys Technologies, an Indian software and IT service provider, the company is aggressively ramping up its operations in the country as more companies are looking at the option of outsourcing. The company’s German clients include Adidas and Siemens.
Chaudhuri points out that with its inflexible labor market, high production costs and feisty trade unions, Germany is ripe for outsourcing, or offshoring, thousands of jobs to low-wage countries such as India.
Recently the subject had become a hot-button political issue in a country partly because of countries like Poland and the Czech Republic, where labor costs are considerably lower, joining the European Union.
According to Andrew Parker, an analyst with Forrester, Germany has been shielded from the phenomenon due to its strict labor laws and conservative corporate culture. The country also has a much tighter laws about termination of employees and handing over employees to third parties. Language, too, has been a problem for some offshore operations such as call centres.
This has led some German firms to come up with a mixed approach towards outsourcing. Basic programming or other back-office tasks are offshored to India, but other aspects of the business are dealt with at 'near shore' operations in eastern Europe, where there are more German speakers.
The political debate surrounding outsourcing is extremely heated. German Chancellor, Gerhard Schroeder, has even branded efforts to shift jobs abroad as 'unpatriotic'. But analysts expect the EU's eastward expansion to encourage more German companies to pursue outsourcing.
Reported by The Strait Times.
posted by A-1 Technology @ 10:44 AM
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