With this, Walmart is assuming the strongest control of its overseas technology operations in its history. As an offshore technology development centre, India is core to this strategy, “enabling leverage, powering innovation and deliver at speed,” in the words of Suresh Kumar in an email to managers on 14 February.
“India is at the centre of Suresh’s strategy,” says the Walmart Labs manager quoted earlier. “The new valley is in Bengaluru. Globally, the city clocks the highest numbers when it comes to e-commerce talent. With Project Indigo, Suresh wants a big chunk of Walmart’s products to come out of Bengaluru.”
According to a top manager of an IT-services firm, who requested anonymity because of the political rhetoric around offshoring, only easier tasks were outsourced to India till 2010. “Companies are becoming more aggressive in terms of what they can do from a global development centre. Now, they are sending R&D and product development work to India, while keeping everything in-house.” According to Nasscom, more than 20 global unicorns have an R&D centre in India. In 2015, that number was seven
Click on India
The success of India’s global development centres—Offshore 3.0—was made possible due to the success of homegrown companies like Flipkart in product development, making Bengaluru and Delhi-NCR hotbeds of technology talent in e-commerce and retail. Consequently, India leads the way in areas like payments, product design and engineering for mobile, and analytics.
“The hires now have functional accountability and influence business outcomes,” says Lalit Ahuja, founder and CEO of ANSR Consulting Inc., which helps foreign companies set up global in-house centres (GIC) in India. Of ANSR’s portfolio of 52 companies, 38 are from the US—like retail corporation Target and food and beverage corporation PepsiCo.
For instance, at Walmart Labs India, the engineers work directly for as many as five functions or ‘horizontals’—from retail and operations to catalogue and supply chain, among others. Apart from Walmart US, it builds technologies for membership-only retail store Sam’s Club in the US, and its international subsidiaries (UK, Canada, Mexico, South Africa and China among 25 countries).
This wasn’t always the case, however. Companies initially tickled into India. The most storied of these were semiconductor company Texas Instruments in the late ’80s, and General Electric’s John F Welch Technology Centre, which planted its flag in Bengaluru’s Whitefield area in 2000.
The 2008 recession sped things up. With the offshoring of critical functions necessary for cost-cutting, the financial services industry made a beeline for India, with the likes of Goldman Sachs, American Express and Citi, as well as newer age companies like PayPal, scaling up their operations in the country.
Development centres now employ 15% of the four million employed by Indian IT services. That’s a pool of more than 600,000 IT professionals, typically techies with experience of working in global in-house centres of multinationals or global consumer startups
Companies save as much as 20% on costs when they offshore work and keep it in-house, says Ahuja. In comparison, service providers like Infosys, IBM, and Wipro have additional costs attached to running a bench of engineers in addition to business development expenses.