Microsoft's recent investments in India appear to be only a part of a larger and more radical plan to conduct an increasing proportion of the company's development activities there. Although the company remains highly profitable in the teeth of a slump it is attempting to keep costs in the west down, while dangling the prospect of 'two for the price of one' worker deals in front of its managers.
Last month the Washington Technology Workers Alliance (WashTech) published the text of a Powerpoint presentation on the advantages of India, apparently made to managers in Redmond last July by senior VP for the Windows division Brian Valentine. It is not clear whether Valentine was describing a formal policy that already exists or putting forward an argument for such a policy. Microsoft's recent activities in India do however suggest that something along the lines of what he presented is at least beginning to happen.
The presentation takes an aggressive approach; "Redmond is not the center of the universe", and "you can do it outside Redmond." He points out that competitors such as Cisco, GE and Dell (not a company we'd automatically categorise as a Microsoft competitor, but still..) "already have this religion" and that it's "time for Microsoft to join the party."
The religion he appears to be proposing is not the large-scale abandonment of development in the US, nor does it seem to include the possibility of major job cuts there. But if Microsoft is to take advantage of lower costs in India, clearly stable employment levels in the US are dependent on continuing growth, and consequent continuing expansion of the company's total headcount. Which we can't assume will go on forever, and we wouldn't expect Microsoft's own execs to assume such a thing.
Valentine seems to envisage outsourcing to local companies (there is a reference to the Infosys Development Center in the presentation) as helping Microsoft move to "developing and marketing our technologies everywhere." This will not simply be low-grade work, as "outsourcing is not just for coding," but on the other hand there will be a component of this. Having substantial Indian operations would allow the total work day to be extended to "16-18 hours," and he dangles the prospect of code being checked into the Indian operation at close of play in Redmond, and returning tested the following morning.
Ability to hire and fire easily also plays a part. Contractors can be hired for "very short engagements," and it is simple to "add and subtract resources for ramp-ups and ramp-downs."
Which would mean Microsoft could add headcount in India fast in order to handle major software development projects, then shed it again at the other end of the process. He end by dangling before managers the prospect of a simple way to get more workers ("Did you get the headcount you needed?") and Challenging them to pick something from their project list "to move offshore today." ®