Tuesday, August 01, 2006

Outsourcing—not just a cost driver

Today, Wells Fargo announced its plans to open a technology center in Hyderabad, India. Wells Fargo experienced great growth over the past year, growing by 31% (making them second--based on volume--in the originator market space, following Countrywide Financial Corp). Wells Fargo employs more than 150,000 people in North America.

The company says the expansion is not based on cost savings but the availability of technology resources in North America. "This is simply about supply and demand," said Victor Nichols, Wells Fargo's head of IT. "Like most major U.S. companies, we're facing a shortage of qualified technical talent, and we're not able to continue to meet this growing demand for such talent here in the United States alone."

The plan for the operation in Hyderabad is to hire 30 to 50 people initially, with plans to employ as many as 300 by the end of 2007.

The number of U.S. computer science graduates has fallen by over one-third during the past four years. The combination of fewer technology and operations specialists--along with lower costs overseas--will continue to drive the demand for outsourcing.

“What can I do to prevent this?” you may ask.

The answer is simple: talk your children into entering the technology space. 80-90 hour work weeks, along with constant change, expanding competition...are you willing to do this?


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