One day into a recent four-day tour throughout India, Microsoft chairman and chief software architect Bill Gates announced that Microsoft would invest an added $1.7 billion into its Indian operations over the next four years.The increase in funding will nearly double the workforce Microsoft already has in place within India, from 4,000 to 7,000 employees.

"Microsoft has been in India for 15 years now, and our commitment continues to grow," said Gates, in a statement from his meeting with Dayanidhi Maran, the Indian minister of communications and information technology, in New Delhi. "India's exceptional IT talent and vibrant local ISV industry is helping to empower a truly global knowledge economy."

While arguably the most visible, Microsoft is not the only business technology provider scaling up its offshore production and presence. In the last year, three major business technology competitors have scaled up their investments within India.

Just two days ahead of Gates' announcement, Intel stated that it would pour $1.1 billion over the next five years into its Indian enterprises, including a venture fund to help start-up businesses. Cisco also announced in October a $1.1 billion investment over three years in an effort to triple its staff in India.

And one of Microsoft's biggest accounting software competitors, Intuit Inc., opened a 21,000-square-foot Product Development and Innovation Center with 20 employees in Bangalore, in November last year.

Divided by a common language

But in a country with a billion people - the second most populated country in the world - only about 3 percent of the population speaks English, and roughly 700 million people live in rural areas.

While India's low-cost, yet well-educated labor helps developers cut expenses, the effects of language and cultural barriers are ones that many CPAs can be heard complaining about when dialing in for customer support.

As a result, many CPAs and other business technology users prefer to keep their provider's customer service and product development centers U.S.-bound.

"Generally the language barrier has been the biggest obstacle in my experience," said Jim Bourke, CPA and director of MIS at the New Jersey-based firm of WithumSmith+Brown. "People can get frustrated when they realize the customer service is coming from offshore and the language barrier gets in the way. As long as the companies are being transparent about [moving customer service offshore] and they're giving me the answers I need, then I'm happy."

Robert Gaby, CPA and partner at California-based Hamilton, Boynton and Associates, agreed with Bourke. "Some experiences have been fine, but for the most part it takes longer to resolve an issue because we have to get around things like the language barrier," he said. "If I were king of Microsoft, I would want to make sure I was delivering a message to customers that they are getting first-rate service, and I would give them whatever it took to give them that feeling of satisfaction."

Beyond the language barrier, there is a deeper rooted problem, said Tushar Hazra, Ph.D and chief technology officer at EpitomiOne, an Ellicott City, Md.-based strategic consulting group specializing in service-oriented architecture and sourcing. And that is cultural barriers.

"Say someone here calls customer service and it goes to India. Sometimes when they are trying to resolve an issue you are having here, they may have all the technical details and the workflow needed, but that is not enough," said Hazra. "It's one thing to have the technical skills, but they cannot relate to the business side as much as a U.S. customer service representative could. This is because someone here faces a very different environment - it is not the same environment as in India."

The riches of the east

A recent Forrester Research paper on trends noted that as companies look offshore for new sources of innovation, they are also tapping into talent that "goes well beyond offshoring of the routine call-center job."

Microsoft said that it's bringing more than just the routine call center to India.

Instead, the company explained that it has earmarked its billion-dollar investment toward research, new product and application development, and support services, while also looking to further India's computer literacy, according to Matt Pilla, an international manager at Microsoft.

A 2005 Gartner Research paper stated that while the most viable options for offshore services include remote-system monitoring of computer system hardware, networks, e-mail support and security, and even virus protection monitoring, these offerings were paving the way for such services as database administration support, ERP operations support, technical support and help-desk services - services frequently used by CPAs on the job.

Today, Microsoft's 4,000 employees in India are spread throughout six different groups and centers: the Global Technical Support Center, the Sales and Marketing Services Group, Global Services India, the Global Delivery Center India, the India Development Center, and Microsoft India Research.

"The announcement isn't about moving jobs from the U.S. to India, it's about increasing the development and services already in India," said Pilla.

And though Pilla claimed that these positions are not cannibalizing the company's Redmond, Wash., headquarters or any of Microsoft's other U.S. investments, a statement from the company about the latest Indian ventures said that the new funding would be used to research and develop "critical enterprise applications that support Microsoft businesses worldwide" and for a support center that would focus on "providing high-level technical resolution services to English-speaking Microsoft customers and partners across the globe."

Although proponents of offshoring claim that services may not be taking existing jobs out of the United States, critics counter by claiming that companies such as Microsoft are transplanting jobs that could be created in the U.S. in favor of a cheaper facility and workforce elsewhere.

Intuit is similarly transplanting such product development centers outside the U.S.

"We expect to grow to about 300 [Indian employees] in the future, as business needs expand and we find the right talent," said Bill Ihrie, senior vice president and chief technology officer at Intuit. "Our plan is to create a world-class product development center in India by hiring smart, innovative engineers who want to build great products for customers - either on the desktop or online. They will be working on products for our existing markets in the United States and Canada."

While transplanting customer service centers offshore may be a nuisance to many, looking outside the country for innovative and creative minds is what will ultimately hurt the U.S. business technology economy, said Hazra; according to Gartner Research, that economy will shrink 40 percent by 2010.

"We can keep sending things like customer service outside this country; anyone can do that. But we have to learn to keep those things that are going to ultimately place innovation into the industry right here in America," said Hazra. "We're going to hear a lot more about this in the next two to three years."

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