Google IT: Outsourcing deal search may become more rewarding for Indian firms

Analysts estimate that Google spends several hundred million dollars annually on IT, among the highest for a Fortune 500 company.
Google, a hitherto parsimonious outsourcer of software services work, has started becoming open-fisted in this regard, thus presenting Indian IT the chance to add a prestigious and lucrative client to their roster.

In doing so, Google is showing the same openness that Apple did by outsourcinglarge chunks of work to Indian IT services companies like Infosys and Wipro in the last few years.

In the past six months, Google has ramped up its outsourcing strategy and started handing out more business to companies such as US-based Cognizant, which currently has most of its employees in India, as well as other multinational firms like IBM & Accenture, three people directly familiar with the discussions said.

Analysts estimate that Google spends several hundred million dollars annually on IT, among the highest for a Fortune 500 company.

Outsourcing is not new to Mountain View, California-based Google. Over the past decade, the company has handed out some software maintenance anddevelopment projects to third-party technology vendors such as Genpact and Infosys.

What, however, has changed is Google’s strategy on outsourcing — the company now increasingly is starting to outsource non-core parts of its business, such as IT infrastructure management, software development and maintenance to IT services firms, the people mentioned above said.

“Outsourcing is not something that’s new to Google —it has always given out small amounts of work to thirdparty service providers. Now what has happened though is that Google sees greater value in outsourcing noncore parts of the business, as it is more cost effective,” said a top US-based executive at a multinational technology services firm, which currently manages software projects for Google. He requested anonymity as these discussions were confidential.

Google’s shift in strategy would spell good news for top executives at homegrown software exporters such as TCS and Infosys, who will be hoping to negotiate more outsourcing business from a company that is widely percieved as a marquee customer. Indian IT firms such as Infosys also currently manage some IT projects for Google, the people mentioned above said.

A Google spokesperson declined to comment for the story. Other technology firms mentioned in the story, including Cognizant, declined to comment as well. “As a policy, we do not comment on clients or prospects,” a Cognizantspokesperson said.

THE APPLE CART
Experts tracking Google said that its new outsourcing strategy is somewhat similar to that of Apple, which currently outsources commoditised softwaredevelopment and maintenance to Indian IT services firms such as Infosys and Wipro. Infosys, in fact, currently counts Apple as one of its large strategic customers and gets well over $100 million of annual business from the Cupertino, Californiabased company.

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