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India Centers Closed to Cut Costs During Recession: The Wall Street Journal (6/8, Worthen, subscription required) reports that Western companies are reversing a decade-long trend of opening facilities in India to handle back-office tasks. To slash costs and eliminate headaches, companies such as Citigroup Inc. and AXA SA are selling offshore computer-programming shops and other operations.
Many companies are "re-examining the costs of running such centers" and finding that the cost savings isn’t as substantial as once thought. With a high turnover rate and Indian workers receiving annual wage increases, “the cost structure of such centers can escalate rapidly”. According to Forrester Research, it costs about 25% more to operate a captive center than to have an outside company provide the same services."
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