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Body shopping is the practice of consultancy firms recruiting information technology workers in order to contract their services out on short-term basis. Regarded as legitimate consultancy by both the companies that practice it and by the people employed, body shopping is disparaged by those IT services companies that assert that they provide real services (such as software development) rather than the "sham" of merely farming out professionals to overseas companies.
History and origin
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Most specialist Y2K consulting companies operating in the US, Europe, Middle East, Japan & Australia outsourced their manpower requirements to technology companies operating in India, which are now global forerunners in offshore and outsourcing.
During 1996-97, these companies responded to the heavy demand by recruiting and training local graduates in India specifically for Y2K. Their consultants either worked onshore or offshore at high utilization rates generating huge profit margins. The high profit margin during this period resulted in fast growth and sufficient assets to expand operations to other IT related business segments post-Y2K.
Even in the modern era of IT off-shoring, outsourcing, cloud computing etc. it is widely accepted that Indian IT Services companies' strategies still continue to focus on similar lines. Researchers points out that large Indian companies focus heavily on developing manpower base with technical skills creating a marketplace to 'buy' technical skills on an hourly or daily basis. This leads to competition with other similar IT services companies from India competing on a global level to win 'time and material skilled labour tenders' from multinational giants. Such a strategy enables IT companies to forecast demand for technical, managerial and competency based on trends.
Body shopping companies mainly recruit offshore and provide training to their employees using their offshore facilities.
Employment costs (both fixed term and permanent) are generally offset by the highly profitable billing ratio, especially for onsite assignments abroad. Most companies boast a utilization rate of 80% which also takes into account of the potential long 'bench period', where an employee is not billable or when his skills are not in demand.
Indian body shopping networks
In India, traditional body shopping has evolved in its due course post-Y2K era to create strong networking and collaboration between competing Indian body shops working abroad. All body shops claim to have the ability to place Indian workers in almost any country using the resources and services of other Indian bodyshops operating in the target country.
In one documented case study deemed as a typical example, a body shop in Hyderabad was able to win a 360 man-month deal with a U.S. company that urgently needed 40 IT workers with a very "specific" skill on a 9-month project. Although the Indian body shop company could easily find lower paid workers in India for the job, the H-1B visa process would take too long to bring them into the United States to work. Thus, the Indian firm forwarded a request to its associate network to locate 40 Indian temporary workers in the United States. A search was undertaken by the network for available Indian H-1B workers, resulting in a list of recently laid-off Indian H-1B workers in the USA. Sponsorship for the laid-off Indian H-1B workers was reassigned to the needing bodyshop and a portion of the newly employed workers salary was given as commission to the peer body shop that help locate the laid off H-1B workers in their associated peer network of Indian body shops. This process of quickly recruiting available H-1B holders is referred to as "body shopping".
- Aneesh Aneesh (2006). "Body Shopping". Virtual Migration. Duke University Press. pp. 39–40. ISBN 9780822336693.
- Brenda S. Yeoh and Katie Willis, editors, 'State/Nation/Transnation: Perspectives on Transnationalism in the Asia-Pacific', Routledge, 2004, ISBN 978-0-415-30279-1, pp. 166-167.
- Xiang Biao (2004). "Indian information technology professionals' world system: the nation and the transnation in individuals' migration strategies". In Brenda S. Yeoh and Katie Willis. State/Nation/Transnation: Perspectives on Transnationalism in the Asia-Pacific. Routledge. pp. 166–167. ISBN 978-0-415-30279-1.
- A. Aneesh (2006). Virtual Migration: the Programming of Globalization. Durham: Duke University Press.
- R. Heeks (1996). India's Software Industry: State Policy, Liberalisation and Industrial Development. New Delhi: Sage Publications.
- Xiang Biao (2006). Global "body Shopping": An Indian Labor System in the Information Technology Industry. Princeton University Press. ISBN 9780691118529.
- Nagesh Kumar (2005). "Moving Away from Body-Shopping". In Ashwani Saith and M. Vijayabaskar. ICTS and Indian Economic Development. SAGE. p. 96. ISBN 9780761933397.