August 2004 News

Kashmir Logs On To India's Tech Outsourcing Boom

9 August 2004

Srinagar: Undeterred by the regular bursts of gunfire, grenade attacks and bomb blasts, a lone tech firm in revolt-torn Kashmir is trying to catch up with an outsourcing boom that has earned India billions of dollars. Magnum Software Services, located on the outskirts of Srinagar, Kashmir's main city and the nerve centre of a 15-year revolt against Indian rule, has become the first company in the region to bag an international back-office services contract. The firm has recruited 315 young Kashmiri men and women in recent weeks to format medical files and research data for a Singapore client. Soon it also plans to provide accounting and legal transcription services. Officials at Magnum said they hope to be an outsourcing pioneer in the troubled region where barely two years ago Internet and mobile phone services were barred because of fears separatist militants could use them to foment violence. 'Anything can happen anywhere, even here in our labs,' said Umar Manzoor, a director at Magnum, located at Rangreth, an industrial centre outside Srinagar. 'We have come to the conclusion that amid bomb explosions, fire fights and suicide attacks, the show must go on,' he said. Tech firms elsewhere across India are riding an outsourcing wave. The $12.5 billion software and back-office services industry is growing at about 30 percent per year, driven by an abundance of low-cost, English-speaking workers. But Kashmir, though home to nearly a dozen technology companies who cater to domestic customers, has lagged as daily bloodshed from separatist violence and tough security measures by troops hinders investment and development. The territorial dispute over the Muslim-majority Himalayan region is at the heart of decades of enmity between India and Pakistan. It nearly triggered a fourth war between the nuclear-armed foes in 2002. Ties have since improved as they make slow progress over a new peace process launched last year. But separatist violence has spiralled in recent weeks in what is seen as an attempt to scuttle moves towards peace. More than 40,000 people have died due to the revolt so far. Magnum, a six-month-old firm which got the Singapore contract through a consultant in New Delhi, has faced its share of teething troubles as it tries to establish its operations. Company officials request that financial information about Magnum not be publicised as it could attract trouble. On a day-to-day basis, the firm is faced with power shortages and a lack of broadband Internet access, which is vital to its business. All of Magnum's project transactions with its client are done by physically shipping CDs to and fro. But Manzoor says that should change in about two months when Magnum hopes to go online. 'This is the first time such a project is happening in Kashmir and we are struggling to expand it,' Sajad Ahmad Kanth, Magnum's chief executive, told Reuters. 'Inshallah (God willing) Kashmir will soon be on the world outsourcing map.' Young Kashmiris, many of whom were unemployed before getting jobs at Magnum, agreed. 'I enjoy working here,' said Shazia Bashir, a young Kashmiri woman who sat in front of rows of computers with her colleagues. 'For young computer graduates this is a very good opportunity under the present circumstances.'


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