Cloud Computing Disrupts Software Outsourcing

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Sean McLain, ‘Cloud’ Eats into  India’s Outsourcing Industry. Wall Street Journal, July 13, 2015.
http://www.wsj.com/articles/indi ... moves-in-1436740981

Quote:

cloud computing "is starting to bite into the revenue and profits as well as hiring in India’s critical outsourcing industry and poses an existential threat to the players that fail to adapt.

"Outsourcing accounts for around 20% of all of India’s exports of goods and services.

"cloud computing—where servers [I did not know server, too, moves to the cloud] and software are accessed via the Internet rather than on local networks or personal computers

"The value of outsourcing deals signed in 2014 shrank 17% to $120.4 billion from $145.5 billion a year earlier, according to consulting company KPMG LLC.

"India’s outsourcing giants rose to prominence in the late 1990s [and eat the lunch of 'Electronic Data Systems and big Western companies at the turn of the century'] because they could deploy armies of engineers at lower salaries than their Western counterparts to build bespoke programs as well as monitor and maintain in-house computer networks cheaply for the world’s biggest companies. * * * As more companies ditch their own data centers for cloud storage and replace custom-made software with off-the-shelf cloud versions, the need for coders and technicians [inside American corporations and in offshore outsourcers] has fallen drastically, undercutting India’s low-cost-labor advantage.

"they [India's outsourcers] are carrying out the very changes that are making their old business model obsolete.  That is an 'economic irony,' said David Tapper, IDC’s head of outsourcing. Indian engineers are moving data to the cloud and helping integrate off-the-shelf cloud applications, 'taking away future business running that infrastructure [computing within the corporation, as opposed to be in the cloud],' he said.