India's Massive Blackout Tests Outsourcing Providers

IT service providers in north and west India were largely unaffected by blackouts that hit 600 million people. But the threat of global power shortages means you should take steps to ensure you're protected -- regardless of where your outsourcing provider is located.

By Stephanie Overby
Thu, August 02, 2012

CIO — In what experts are calling one of the worst blackouts in history, more than half a billion people were without power when the grids in north and west India buckled twice in as many days. Multinational outsourcing providers with operations in the region appear to have passed the most significant test to date of their well-worn disaster recovery and business continuity processes.

"Indian providers have had to deal with these contingencies—international telecom cables being sliced, large union strikes that impact workers—so they are generally more prepared to deal with [them]," says Steve Hall, partner with outsourcing consultancy ISG.

"The problem of outages [in India] is by no means new," adds Stan Lepeak, director of research for advisory services at KPMG. "[But] the recent event was extreme."

News: Outsourcers Apparently Don't Miss a Beat in Face of Massive India Power Outage

While the southern city of Bangalore remains the unofficial capital of India's IT outsourcing industry, most major providers have operations in the northern metropolis of Delhi, and nearby Noida is home to the Indian headquarters of HCL Technologies and CSC as well as a major IBM Global Services data center.

Tier 1 and tier 2 providers have made significant investments in backup plans capable of providing at least five to seven days of continuous operations in the event of a power failure, says ISG's Hall. Most campuses are equipped with diesel generators, water and other off-grid power sources.

"Their major operations centers are set up to operate like independent nation-states," says Jim Slaby, research director of sourcing security and risk strategies for outsourcing consultancy HfS Research. "They also have contingency plans to relocate workers to backup locations in response to extended outages at any one facility, and the ability to reinforce the physical security of their facilities in the event of natural disasters [or] civil unrest."

Infrastructure, Livelihood Affected by Blackouts

Indeed, in situations like the recent blackout, human resources issues often prove to be the biggest challenges. "The issue this time around is impact on transportation where people rely on mass transit," says Atul Vashistha, chairman off offshoring consultancy Neo Group. As with a natural disaster, many employees remain at home.

"If a situation arises that becomes a widespread problem for the populace as a whole, the workers who staff facilities—with full power backup and supplies—will be more likely attending to family and personal matters than showing up for the next shift," says Tom Young, partner with ISG, who has seen similar problems after hurricanes in Florida, for example. "Minimally, they will be distracted; worst case, they [will] not show up at all."

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