20 June 2002 | David Arminas
UK firms are poised to bring outsourced operations in India back to Europe if war breaks out between India and Pakistan over Kashmir.
Thames Water, the UK's largest water utility, outsourced its IT maintenance to Bangalore-based Wipro last year and cut costs by 20 per cent, saving around £1 million.
But concerns over disruptions to IT services have forced the company to consider bringing services back to Britain.
A spokesperson for Thames Water told SM: "The Indian company moved swiftly to assure us it is ready if problems arise. It presented us with a contingency plan, including the ability to move their operations for us to Germany and also Reading, where we are based."
Wipro has sent notices to clients about its emergency plans and has designated its Chennai site, furthest from Kashmir, as the emergency business centre.
Wipro is ready to move its staff around India and to other countries, the notice explained.
Cognizant Technology Solutions, a US-based IT services company that has most of its operations in several southern Indian cities including Bangalore and Calcutta, has also made contingency plans in the event of hostilities.
Dave Parmenter, marketing director at Cognizant in the UK, said the company has been contacting its clients and sales people with details of emergency plans.
"If it takes moving people over here, we'll do all it takes to deliver our service," he said.
"We have just opened a new offshore facility in Ireland, where we can put in extra people. And we've issued a letter to all our account managers and sales people saying there are contingency plans in hand," he said.
Ken Cole, a partner in consultancy Strategic Procurement Services, said the Kashmir situation highlighted one of the dangers of using suppliers in countries with low cost bases.
"There is always a risk when going to an area of cheap labour. India, for example, has had a very stable workforce but a troubled political climate," said Cole, who is also chairman of the CIPS information systems committee.
IT software and services export has grown in importance to the Indian economy over the past 10 years, according to the National Association of Software Services Companies in India, which has been urging its members to keep in close touch with clients over the Kashmir issue.