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Body shopping is the practice of
consultancy A consultant (from la, consultare "to deliberate") is a professional (also known as ''expert'', ''specialist'', see variations of meaning below) who provides advice and other purposeful activities in an area of specialization. Consulting servic ...
firms recruiting workers (generally in the
information technology Information technology (IT) is the use of computers to create, process, store, retrieve, and exchange all kinds of data . and information. IT forms part of information and communications technology (ICT). An information technology system (I ...
sector) in order to contract their services out on a tactical short- to mid-term basis. IT services companies that practice body shopping 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 the mid-1990s when there was a huge demand for people with mainframe,
COBOL COBOL (; an acronym for "common business-oriented language") is a compiled English-like computer programming language designed for business use. It is an imperative, procedural and, since 2002, object-oriented language. COBOL is primarily us ...
and related technology skills to prevent systems being affected by the
Y2K The year 2000 problem, also known as the Y2K problem, Y2K scare, millennium bug, Y2K bug, Y2K glitch, Y2K error, or simply Y2K refers to potential computer errors related to the formatting and storage of calendar data for dates in and after ...
bug. Most specialist Y2K consulting companies operating in the US, Europe, the Middle East, Japan and Australia outsourced their technical manpower requirements to companies operating in India. During the period of 1996–97, such companies based in India responded to the heavy demand by recruiting and training local Indian graduates specifically for
Y2K The year 2000 problem, also known as the Y2K problem, Y2K scare, millennium bug, Y2K bug, Y2K glitch, Y2K error, or simply Y2K refers to potential computer errors related to the formatting and storage of calendar data for dates in and after ...
. Their consultants either worked onshore or offshore at high utilization rates, generating huge
profit margin Profit margin is a measure of profitability. It is calculated by finding the profit as a percentage of the revenue. \text = = There are 3 types of profit margins: gross profit margin, operating profit margin and net profit margin. * Gross Prof ...
s and cash reserves. The high profit margin during this period resulted in fast growth and sufficient assets to invest and expand operations to other IT related business segments after Y2K.


Modern era

In the modern era of IT off-shoring, outsourcing, and cloud computing, it is widely accepted that IT service companies' strategy (especially for those operating with a huge technical manpower base in India) still continue to focus on similar lines. The companies that do body shopping are renowned for training and developing technical skills for a wide range of client base that is of current demand. Researchers point out that many Indian companies focus heavily on developing a large pool of human resources with technical skills creating a
marketplace A marketplace or market place is a location where people regularly gather for the purchase and sale of provisions, livestock, and other goods. In different parts of the world, a marketplace may be described as a '' souk'' (from the Arabic), ' ...
to 'buy' technical skills on an hourly or daily basis. This led to significant market developments in two areas in the early 2000s: # Fierce competition amongst IT service companies from India competing on a global level to win 'time and material and labor tenders' from multinational giants for their IT needs. Such a strategy, though heavily linked to procurement needs of the end-customer, enables IT companies operating from offshore (in particular India) to forecast demand for technical and managerial competencies based on IT-skills-market trends in order to position themselves competitively.Brenda S. Yeoh and Katie Willis, editors, 'State/Nation/Transnation: Perspectives on Transnationalism in the Asia-Pacific', Routledge, 2004, , pp. 166-167. # Technology and consulting companies operating mainly in western markets during the 1990s (e.g.
Accenture Accenture plc is an Irish-American professional services company based in Dublin, specializing in information technology (IT) services and consulting. A ''Fortune'' Global 500 company, it reported revenues of $61.6 billion in 2022. Accentur ...
, IBM,
Hewlett-Packard The Hewlett-Packard Company, commonly shortened to Hewlett-Packard ( ) or HP, was an American multinational information technology company headquartered in Palo Alto, California. HP developed and provided a wide variety of hardware components ...
) were forced to open offices in southeast Asia and move their manpower base there to compete with traditional manpower providers operated from India (e.g.
Infosys Infosys Limited is an Indian Multinational corporation, multinational information technology company that provides business consulting, information technology and outsourcing services. The company was founded in Pune and is headquartered in Ba ...
,
Wipro Wipro Limited (formerly, Western India Palm Refined Oils Limited) is an Indian multinational corporation that provides information technology, consulting and business process services. Thierry Delaporte is serving as CEO and managing directo ...
,
Tata Consultancy Services Tata Consultancy Services (TCS) is an Indian multinational information technology (IT) services and consulting company with its headquarters in Mumbai. It is a part of the Tata Group and operates in 150 locations across 46 countries. In July ...
) on large global-level IT bids. According to a U.S. Citizenship and Immigration Services report to Congress, for fiscal year 2012, 59 percent of H-1B visas went to computer-related occupations. The same report also cited that 64 percent of the H-1B visa petitions granted were given to workers originating from India.


Revenue model

Body shopping companies mainly recruit off-shore and provide training to their employees using their off-shore facilities. Employment costs (both short-term and permanent) are generally offset by the highly profitable billing ratio, especially for on-site assignments abroad. Most companies boast a utilization rate of 80%, which also takes into account the potentially long 'bench period', where an employee is not billable or when their skills are not in demand.


Indian body shopping networks

In India, traditional body shopping has evolved in its due course post-
Y2K The year 2000 problem, also known as the Y2K problem, Y2K scare, millennium bug, Y2K bug, Y2K glitch, Y2K error, or simply Y2K refers to potential computer errors related to the formatting and storage of calendar data for dates in and after ...
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 body shops 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 The H-1B is a visa in the United States under the Immigration and Nationality Act, section 101(a)(15)(H) that allows U.S. employers to temporarily employ foreign workers in specialty occupations. A specialty occupation requires the application of ...
process would take too long to bring them into the United States to work. Thus, the Indian firm forwarded a request to its associates' 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 US. Sponsorship for the laid-off Indian H-1B workers was reassigned to a body shop and a portion of the newly employed worker's salary was given as commission to the peer body shop that helped to 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 what is referred to as "body shopping".


Offshoring and nearshoring

A similar "
offshoring Offshoring is the relocation of a business process from one country to another—typically an operational process, such as manufacturing, or supporting processes, such as accounting. Usually this refers to a company business, although state gover ...
" practice started appearing more and more in the 2010 timeframe and which was a practice known as "
nearshoring Outsourcing is an agreement in which one company hires another company to be responsible for a planned or existing activity which otherwise is or could be carried out internally, i.e. in-house, and sometimes involves transferring employees and ...
". Nearshoring was the practice of hiring mostly IT professionals from Mexico. The outward appearance being the advantage of "nearshoring" personnel being within a 2-hour or less time difference to continental U.S. companies opting to use these nearshoring services.


See also

*
L-1 Visa An L-1 visa is a visa document used to enter the United States for the purpose of work in L-1 status. It is a non-immigrant visa, and is valid for a relatively short amount of time, from three months (for Iran nationals) to five years (India, Japan ...
*
Sweatshop A sweatshop or sweat factory is a crowded workplace with very poor, socially unacceptable or illegal working conditions. Some illegal working conditions include poor ventilation, little to no breaks, inadequate work space, insufficient lighting, o ...


References


Further reading

* * *{{cite book, title=ICTS and Indian Economic Development, editor1=Ashwani Saith , editor2=M. Vijayabaskar , author=Nagesh Kumar, pages=96, chapter=Moving Away from Body-Shopping, publisher=SAGE, date=2005, isbn=9780761933397 Offshoring Outsourcing