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Low-cost outsourcing to India still a big draw for drug majors

Low-cost outsourcing to India still a big draw for drug majors
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First Published: Sat, Feb 10 2007. 12 00 AM IST
Updated: Fri, Feb 09 2007. 11 43 PM IST
Global pharmaceutical companies GlaxoSmithKline (GSK) and Pfizer will increase the volume of software and call centre work they outsource to Indian vendors Tata Consultancy Services, Wipro and Satyam Computer Services in 2007, the technology chiefs of the drug makers say.
GSK North Carolina, which currently outsources its software development to Satyam and Wipro, is looking to increase its total “offshoring of services” to Indian vendors to $126 million (Rs554.4 crore) in 2007 from $84 million (Rs369.6 crore) the previous year, Ian M. Hau, senior vice-president global services and applications, GSK , said in an interview.
Offshoring refers to work outsourced to service providers outside a company’s home country.
Other drug makers such as Pfizer, Novartis and Johnson & Johnson are also planning to contract technology and business process outsourcing (BPO) vendors from India to take advantage of low-cost engineering resources.
"We saved round $30 million last year, and aim to save $290 million in technology costs by 2009 through offshoring,” Hau said in an interview at Nasscom 2007, the annual conference of software trade body National Association of Software and Service Companies.
GSK, which spends $1.2 billion in technology every year, has reduced its information technology headcount in the US by nearly half since it started outsourcing such services. "Five years ago, we had a 7,400-member internal team of technology professionals in the US, today we only have around 4,000 professionals," said Hau. GSK has moved around 1,000 jobs to India since 2001.
Jonathan White, senior vice-president of worldwide technology and business innovation of Pfizer, told Mint that the drug maker hopes to save $300 million in technology costs by outsourcing to India in the next two years. Pfizer currently outsources maintenance and management of its software applications to TCS, Satyam and Wipro, the value of which White declined to detail.
For Bangalore-based Wipro, the increased tech spending by drug companies will almost double its revenue from pharmaceuticals industry to $100 million in 2007. "Outsourcing of infrastructure services and BPO services in the area of bio-statistical analysis is going to be the new avenue for growth in 2007," Sudip Banerjee, president of Wipro's enterprise solutions division, said.
Wipro is doing a few pilot BPO projects for pharmaceuticals clients such as Novartis. Genpact, a Gurgaon-based call centre company, runs a 700-man support operation for GSK running accounting, human resources and data management services for the drug maker.
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First Published: Sat, Feb 10 2007. 12 00 AM IST
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