Emerging Companies, Merging Economies March 2013
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In the United States, companies are facing increasing pressure to move some hitherto outsourced operations back home—for political reasons and to ensure appropriate customer service. Some Indian companies have started hiring US-based technology workers and are expanding their operations in the United States. Indian companies want to develop close relationships with state governments, exchanging regional investment for tax breaks. In late 2012, information-technology (IT) consultancy Infosys (Bangalore, India) acquired an outsourcing company in Iowa, and IT-services provider Mahindra Satyam (Hyderabad, India) opened a new outsourcing center in North Dakota. Outsourcing company Mindtree (Bangalore, India) plans to expand its US operations to include 400 engineers. The strategy serves three purposes: First, it maintains outsourcing as a business model (US companies spent almost $28 billion on outsourcing in 2011); second, it creates a positive impression in the United States; and third, it enables the company to tap into a large talent pool.
Indeed, the quest for talent is another force driving some emerging brands' plans for global expansion. Telecommunications-equipment manufacturer Huawei Technologies Co. (Shenzhen, China) has announced plans to set up a research-and-development center in Finland. Huawei believes that Finland has an extremely open business environment that stimulates innovation. In addition, the company may be able to pick up former employees of rival company Nokia (Espoo, Finland), which is going through difficult times. Reportedly, the new facility will require an investment of $90 million, and Huawei intends to staff the facility with 30 employees initially and then hire about 70 more during the ensuing five years. Arguably, the decision to open the center also serves to generate positive sentiment about the company in Western countries.
Academia is also establishing economic connections among regions; many technology experts from emerging economies attended foreign universities. According to an 18 October 2012 Nature article, the United States is the primary destination for expatriate scientists. Indeed, in 2010, non-US citizens earned about 50% of doctorates in the physical sciences at US institutions.