Offshore Exploration

While HP has had "significant capability in India since the mid-'80s," it is putting resources into a newer venture in Shanghai, China, said Jay Connor, vice president of marketing and strategy for HP Services' consulting and integration unit. "The level of work we do in India has gone up in the past [several years as we look for more cost-effective ways [to serve clients," he said.

While HP's development center in India has about 3,000 employees providing application development, support and other services, the center in China has fewer than 100 and is growing, he said.

The moves come as solution providers are honing their own diplomatic skills by inking deals with developers in India, Ireland and elsewhere.

"We are trying to refine our model so that we would be the onshore [component and farm development out to the offshore [team," said Tom Garvin, executive vice president at Acuent, a Parsippany, N.J.-based solution provider with a strong ERP focus. "We would be the designers and planners. We would do the layout and create the specifications and then farm that work out to offshore to have them build it. Then we would lay it into the template and test it."

The economic reasons to build ties with offshore developers are compelling, Garvin said. For one thing, customers are expecting lower hourly rates, he said.

"If I go into a [bid and every one of my resources is $150 an hour, I am going to lose big time," he said. Skilled developers can be hired offshore for as little as $15 per hour, Garvin said.

Shirish Nadkarni, CEO and co-founder of Edison, N.J.-based Horizon Companies, said he has arrangements with about 50 developers in India. The services arms of HP, IBM and Oracle are "shopping around" for offshore development capabilities, and some of these companies have approached the solution provider about working together, he said.

"We are trying to become partners with IBM Global Services," Nadkarni said. "They need us because we know SAP's human resources module, which we are very sure PwC Consulting or [IBM Global Services does not know."

IBM Global Services acquired PwC Consulting earlier this year.