Mumbai blasts won’t hit outsourcing, investments to India

The terrorist attacks Tuesday on trains in the western India city of Mumbai appeared unlikely to dampen investments and outsourcing to India, which has weathered such tragedy before with resilience.

Investors are not naive and have factored in the political, economic, and other risks involved before investing in India, said Sanjay Anandaram, a partner at JumpStartUp Venture Fund, a US$45 million fund with headquarters in Mauritius.

Bombs that exploded in trains at eight locations in Mumbai Tuesday killed over 190 people and injured 700. The Indian government suspects separatist Kashmiri Muslim groups that are demanding independence for the part of Kashmir currently under Indian control. The other part of Kashmir is controlled by Pakistan.

The separatist groups are believed by the Indian government to be responsible for a number of terrorist attacks in India, including one in December at the Indian Institute of Science in Bangalore, one of the country’s top most educational institutions. The government also found evidence from terrorists killed in an encounter last year that they were targeting India’s successful outsourcing industry.

Despite initial fears of a stock market slump after the blasts, the 30-share index of the Bombay Stock Exchange in Mumbai was up by 3 percent at its close Wednesday, to 10,930, mainly on buying in tech stocks after India’s second largest outsourcer, Infosys Technologies Ltd., forecast strong growth for its current fiscal year.

The blasts Tuesday have not led investors to revaluate doing business in India, because they are among several attacks, riots, and natural calamities to have affected Mumbai and the rest of the country over the years, Anandaram said. After similar bombings targeted business centers in Mumbai in 1993, business returned to normal once the story was no longer in the news pages, he noted.

Customers outsourcing to India have their own business continuity plans in addition to what Indian outsourcers offer, said a spokeswoman for ICICI OneSource Ltd., a business process outsourcing company in Mumbai. “On an average less than 10 percent of what is outsourced by a customer is offshored to India, and within India they use providers in multiple locations,” she said. ICICI did not have to move work to its centers outside Mumbai Tuesday, as all its staff for the evening shift were already in the office, she said.

The blasts also brought to the fore the ability of the city to fend for itself. Even before the police reached the blast sites, locals were helping people out of trains and sending victims to hospitals.

Mobile phone networks in Mumbai were congested by anxious callers trying to learn the fate of relatives and friends on the trains, and a number of people in the city and outside turned to blogs for information.

One blog, called Mumbai Help , provided information on the dead and injured, names and numbers of hospitals, traffic advisories, and offers of blood donation and temporary accommodation for stranded passengers. Contributors to the blog also helped people get in touch by phone with relatives.

But for most of Mumbai, where people are more likely to have a TV at home than a PC, the television networks were the key source of information about the tragedy.

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