How US IT Consulting Companies Acquire Indian IT Outsourcing Companies

ByPrimary Researcher

Executive Summary

  • US IT consulting firms have been acquiring Indian outsourcing companies.
  • We cover why do they do this and what it means.

Introduction

This story tells a person a lot about what is happening to IT services. It is just one component of how IT has been increasingly Indian.

Beginning with Who is iGate?

iGate was an Indian IT outsourcing company. iGate had a history of displacing US workers, as is covered in the following article.

In 2008, the multinational paid $45,000 to settle charges by the U.S. Department of Justice for discriminating against American citizens. iGATE was advertising jobs in the U.S. for foreign workers — effectively saying Americans need not apply.

iGATE said it brings its foreign workforce into Canada under the Temporary Foreign Worker Program and under intra-company transfer visas.

However, a Toronto immigration lawyer says there is no loophole in any visa category that allows companies to displace Canadians who are able to do the work. – CDC

The Capgemini Acquisition of iGate

See the following quote from the Capgemini website back in 2015.

Paul Hermelin, Chairman and CEO of Capgemini, said: “This acquisition represents a major step in Capgemini’s history. With IGATE, our operations in North America have taken a new dimension and are now our largest market in revenues. Our combined operations in India have now reached the size to compete at par with the world leaders in our industry. It will also benefit our customers by taking further our industrialization and innovation initiatives. On behalf of our group, I’m glad to welcome the 31,000 people of IGATE to Capgemini”.

This means that the employees working for iGate now work for Capgemini. This means that part of Capgemini is a bottom-feeding Indian outsourcing firm. It is curious how Capgemini can, in one move, buy a bottom-feeding outsourcing firm like iGate, and then declare it is about “innovation.”

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Conclusion

Capgemini and other large consulting firms used to create highly paid jobs (albeit with an enormous amount of lying). However, now each of these companies has some type of outsourcing/offshoring business, and the income inequality in each company is far higher than it was historically. This is covered in the following quotation.

None of these companies mentioned here are Consulting Companies. They are really just staffing companies looking to place bodies for high hourly rates and pay the staff next to nothing. – Terence Somers

Along with growing or acquiring Indian outsourcing firms, the percentage of Indians in all of the major and most of the minor US IT consulting firms has greatly increased in the past few decades. Increasingly it will be most accurate to consider firms like Accenture and Deloitte as Indian companies or Indian managed companies as IBM’s consulting division is already thought of today.

References

https://www.capgemini.com/ca-en/news/capgemini-completes-the-acquisition-of-us-based-igate-corporation/

https://www.cbc.ca/news/business/cibc-ceo-outsourcing-india-1.4050248