An article in the Economic Times yesterday spoke about GE, one of the largest outsourcers to India, planning to derisk India and expand relation ships in other locations like China and Latin America.

This is not very surprising considering that GE has been a pioneer as well as a hard nosed buyer. GE has been known for outsourcing large volumes of work at low price points, and on occasion also invest in the vendor. As such, whether to work with GE because of the volume of business or to stay away because of dependence on a powerful buyer who negotiates hard, has been a dilemma for many Indian companies.

Infosys, in retrospect, had a chance to wean away from GE at a time when it was relatively “easier”. Many of the the other first tier players and the top 20 in India continue to do substantial business with GE.

GE’s strategy is to expand its presence in other emerging markets- it was one of the first companies to check out China. TCS set up operations in China to service GE; GE also works with local Chinese players. Now, one reads that GE is unhappy with China’s attitude and is reconsidering its growth plans. That is the risk that vendors have to take.

Likewise, GE has business interests in Brazil and other parts of Latin America, and vendors either need to shore up their presence, or choose to not compete for such business.

At a time when vendors are going global with their operations and buyers (albeit a few), are globalizing their outsourcing strategy, lessons learned from GE would be really relevant.

It would be great to hear your views on this topic.

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