Body shop
Encyclopedia
Body shopping is the practice of consultancy firms recruiting information technology
workers in order to contract their services out on short-term bases. 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.
, COBOL
and related technology skills to prevent systems being affected by the Y2K bug.
Most specialist Y2K consulting companies operated in 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 rate 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 IT age of offshoring and outsourcing, it is widely accepted that Indian IT companies growth strategy still continue to focus on similar lines, which is, developing skills for a changing marketplace
and catering skills demand of their global customers by Body shopping.
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.
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".
Information technology
Information technology is the acquisition, processing, storage and dissemination of vocal, pictorial, textual and numerical information by a microelectronics-based combination of computing and telecommunications...
workers in order to contract their services out on short-term bases. 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
Body shopping in IT originated during 1996-1999 where there was huge demand for people with MainframeMainframe computer
Mainframes are powerful computers used primarily by corporate and governmental organizations for critical applications, bulk data processing such as census, industry and consumer statistics, enterprise resource planning, and financial transaction processing.The term originally referred to the...
, COBOL
COBOL
COBOL is one of the oldest programming languages. Its name is an acronym for COmmon Business-Oriented Language, defining its primary domain in business, finance, and administrative systems for companies and governments....
and related technology skills to prevent systems being affected by the Y2K bug.
Most specialist Y2K consulting companies operated in 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 rate 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 IT age of offshoring and outsourcing, it is widely accepted that Indian IT companies growth strategy still continue to focus on similar lines, which is, developing skills for a changing marketplace
Marketplace
A marketplace is the space, actual, virtual or metaphorical, in which a market operates. The term is also used in a trademark law context to denote the actual consumer environment, ie. the 'real world' in which products and services are provided and consumed.-Marketplaces and street markets:A...
and catering skills demand of their global customers by Body shopping.
Revenue model
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
H-1B visa
The H-1B is a non-immigrant visa in the United States under the Immigration and Nationality Act, section 101. It allows U.S. employers to temporarily employ foreign workers in specialty occupations...
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".