Recession: Western companies shut centres in India

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Wall Street Journal
Washington, Jun 8: Wall Street Journal claims that many of the Western companies have recently sold or closed back-office facilities in India, in an effort to cut cost and eliminate headaches during the recession.

The US financial daily said in a report published on Friday, Jun 5 that the firms like Citigroup Inc and insurance firms AXA SA and Aviva PLC have sold offshore computer-programming shops and other operations to companies in India in last one year. Some have received hundreds of millions of dollars for their centres, while others have sold their sites for the cost of the equipment inside.

It added that most of the time the buyer gets a multiyear contract to provide the same services back to the seller, while other companies like Delta Air Lines Inc and UAL Corp, have shut down centres in India.

In March, biotechnology company BioImagene Inc, Sunnyvale, California, transferred its research-and-development centre in India to outsourcer Symphony Services Corp after deciding to replace most of its 50 overseas software developers with ones in the US BioImagene sold the India facility for the cost of the computer equipment in it, says CEO Ajit Singh as cited by the Journal.

This initiative by the companies represent an about-face from earlier this decade, when the companies were rushing to open captive units in India and other nations where the workers cost a fraction of those in United States. Many research conducted shows that atleast 500 Western companies have such centres in India.

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