India's software technicians are well educated, and they work cheap. An experienced programmer in India earns about $6 per hour, according to Roland Berger Strategy Consultants. A U.S. programmer can earn 10 times that amount.
The Indian companies offer a range of services, such as writing programs, handling upgrades and doing IT consulting to computer-based parts-simulation work.
For example, Satyam Computer Services Ltd. creates software that automakers use to keep track of parts and accessories. In addition to writing code, Wipro also consults on the integration of new software with existing systems. Tata Consultancy Services Ltd., which has a new office in the Detroit suburb of Troy, Mich., offers engineering services in addition to IT work. The company is part of Tata Group, the Indian conglomerate that includes automaker Tata Motors
U.S. IT vendors are feeling the heat.
Indian firms use a "body-shop approach - throw more bodies at it at a cheap rate to get into the market," says Dave Colburn, vice president of global manufacturing industry for EDS.
"They don't have the global footprints that many of the corporations have," Colburn says.
And the Americans have their own offshore outsourcing strategies.
Kevin Campbell, Accenture's global managing director for business process outsourcing, says Accenture has more than doubled its Indian work force during the last year to 12,000.
Meanwhile, Accenture says its worldwide employment rose from 83,000 in 2003 to 100,000 last year.
"Being able to blend the best of onshore and offshore and multiple-shore locations is part of the advantage we have," Campbell says.
Tom Ruch, vice president of automotive and aerospace industries for IBM Global Services, says IBM customers "are really surprised when I talk to them about the depth and breadth of the offshore capabilities that IBM has."
Outsourcing solely to cut costs has drawbacks, says Kevin Mixer, automotive research director at AMR Research.
"You never cost-cut yourself to greatness," Mixer says.
The Indian firms see things differently. "I do not think the automotive companies have fully tapped the offshore potential yet, like some of the other industries have done already," Wipro's Rao says.
"So that gives rise to optimism that there will be more outsourcing happening."
Wipro, owned by India's wealthiest man, Azim Premji, has more than $1 billion in annual revenues. Premji transformed Wipro from a vegetable oil processing company into India's third-largest software exporter.