Mumbai Bombings Shake Outsourcing Community

 
 
By Stan Gibson  |  Posted 2006-07-13
 
 
 

Mumbai Bombings Shake Outsourcing Community


The big fear of offshore outsourcing customers has become a reality: a major bombing attack in an outsourcing hub.

On July 11, at least 200 commuters were killed by terrorist bombings in Mumbai, India, a key outsourcing locale.

In the wake of the attacks, outsourcing providers in Mumbai scrambled to make sure employees and customer data were safe and secure. Meanwhile, outsourcing customers sought reassurances that their Indian partners could handle future unforeseen events.

The terrorist attack in Mumbai—and conflict between Israel and Lebanon for that matter—raise a series of questions for companies sourcing technology globally.

Do you know the disaster recovery plans of your offshore services provider? Are their plans integrated with yours? And how prepared are these providers?

Louis Rosenthal, managing director of group shared services for IT for ABN AMRO Bank in Chicago, said he has inspected the readiness of his outsourcing providers, which include Tata Consultancy Services, Infosys and Patni Computer Systems.

"We were very explicit about the construction, operation, location, and resilience of the offshore development centers that our vendors developed for us. These facilities are in Mumbai, as well as a number of other cities," said Rosenthal, whose operations werent impacted.

India is no stranger to political violence or natural disasters. Unrest with Pakistan over the disputed Kashmir province has endured for decades and the annual monsoon season puts big cities like Mumbai at risk.

In July, 2005, Mumbai saw 40 inches of rainfall in a single day. Last year, many TCS employees had to remain in their offices or in nearby hotels overnight, waiting out the rains.

Last week the situation was different, as TCS workers took bus services and company-provided transportation home the night of the attacks.

Heres an early survey of how the leading players in India handled the Mumbai attack.

  • For Tata Consultancy Services, with 16,000 employees at 16 locations in Mumbai, including its headquarters, the margin between safety and disaster was narrow one.

    Because Tata workers routinely stay at work until after 6:30 p.m., the hour of last weeks attacks, TCS several thousand employees who take Mumbais commuter trains escaped the explosions—no TCS employees were killed or injured in the blasts.

    New study reveals that the outsourcing boom may be over. Click here to read more.

    Nonetheless, the TCS crisis management center in Chennai–on the other side of the Indian subcontinent–was activated.

    With cellular networks jammed, Tata managers, augmented by human resources and security staff, contacted workers via the companys internal VOIP (voice over IP) service, e-mail and SMS, telling them to stay put and for those who were on the night shift to stay at home, said R. Vaidhyanathan, the TCS Corporate Crisis Management Leader in Chennai.

    TCS backs up critical data at its Mumbai offices and in Chennai, and can operate there and in Bangalore.

  • Patni Computer Systems, which has major operations in Mumbai, was touched by the attacks. "One employees father was killed and another employees wife was on another car on one of the trains and was really spooked," said Russell Boekenkroeger, executive vice president of Patni in Cambridge, Mass.

  • Wipro Technologies, which has major business process outsourcing operations and several thousand employees in Mumbai, invoked its business continuity plans for the city, which call for processing to be transferred to facilities in other cities, according to a Wipro spokesperson.

  • IBM, which has touted its billion-dollar investments and some 40,000 employees in India, said through a spokesman that it did not suffer any casualties from the attacks and intends to continue with its aggressive investment schedule.

    The company has 2,300 employees at its Daksh business process outsourcing unit in Mumbai

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    The Importance of Business


    Continuity Planning">

  • Even though Indias biggest technology center, Bangalore, was unscathed, reverberations of the Mumbai attacks were felt.

    "This particular episode doesnt have any impact. But our customers are interested in understanding in detail our business continuity planning," said Nandan Nilekani, CEO of Infosys in Bangalore, in an interview.

    Infosys has a disaster recovery facility on the island of Mauritius, near Madagascar and simulates many scenarios, including flooding and political violence. "Customers come in and evaluate our plans," Nilekani said.

    Customers of these giants said the response to the Mumbai attack was encouraging.

    Indymac Bank outsources business processes such as credit risk analysis, incentive compensation calculations and back office servicing to WNS in Mumbai.

    "Our first concern was an impact on operations. The vendor was in contact with us immediately," said Mark Nelson, executive vice president of global resources at Indymac Bank in Pasadena, Calif.

    "We were hoping the people were OK. The people on the evening shift had already arrived. The cell lines were jammed, but text messaging worked. They tracked everyone down and they were OK," said Nelson.

    WNS has 75 people working on the Indymac account in Mumbai. Indymac also contracts with outsourcer Cognizant for application development in Pune, India, about 90 miles from Mumbai.

    In all cases, Indymacs data resides entirely in the United States. "It never goes offshore. People access our systems by way of secure lines," said Nelson.

    LeftHand Networks, a storage software vendor that contracts with Patni for product development work, replicates all its project data at its offices in Boulder, Colo.

    Click here to read more about outsourcing in India.

    Still, Bill Chambers, Chairman and CEO of LeftHand was on the phone to Patni in Mumbai to make sure the 50 Patni employees working on his project were safe.

    "Its a terrible and a tragic event. The first thing I did was to call and make sure our team and their families were safe. And everyone was safe," Chambers said.

    For their parts, Chambers, Nelson and Rosenthal agreed that the attacks dont impact their move to expand global operations. "Pulling back doesnt make sense," said Chambers.

    Rosenthal said ABN AMRO has prepared for numerous unpredictable events since the attacks on the World Trade Center on Sept. 11, 2001.

    "We didnt stop doing business in New York City or London after similar incidents and well continue with our technology program in India," he said in an e-mail interview, adding that ABN AMRO also has significant operations in Florida, which has been roiled during hurricane season.

    He also noted that ABN AMRO helped create ChicagoFIRST, a plan to ensure resilience in the Chicago financial services sector in the face of terror threats.

    Analysts said the attacks wont stem the tide of outsourcing to India in the long run.

    Julie Giera, an analyst at Forrester Research in Cambridge, Mass., said, "Youll find that companies will ask the questions: Are we prepared? Are we vulnerable? But I dont think there will be any change in investment in India. The trends are too strong to reduce cost and improve quality."

    Mark Kobayashi-Hillary, a consultant and author based in the UK offered, "I understand why some people might be feeling some concern for investment into India at present. But the longer-term trend of trade and investment will increase as the growth has such strong momentum now,"

    Kobayashi-Hillary added, "Indians have a remarkable tenacity and they will be concerned about this, but it wont stop me returning to Mumbai."

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