Niall O’Connor is not a household name, but for Infosys and Wipro he was the most important person on the planet when he visited Bangalore in late January. As the chief information officer (CIO) of Apple Inc, he chooses which clients get software outsourcing orders worth hundreds of millions of dollars from the revered American company, and the senior most officials at Infosys and Wipro were making sure that O’Connor got the 21-gun salute. It wasn’t only about the money for them: just working with Apple is regarded as a badge of honour.
Almost maniacally secretive, the maker of iPhones and iPads outsources software application development and maintenance work worth about $100 million (490 crore) to Indian companies, about a fifth of its total global outsourcing spending. It is now looking to quadruple the amount it spends in India, making it all the more covetous for Infosys and Wipro.
Apple, like its co-founder the late Steve Jobs, has had something of a love-hate relationship with India. Jobs travelled to India on a spiritual quest in 1974 but never returned to the country. Apple started a development centre in Bangalore in 2006 but closed it within a few months.
“Working with Apple on its internal IT has benefits beyond just the immediate business. With many outsourcing customers now ready to pay for projects that integrate iPads and iPhones with business applications, the learning goes a long way in winning other projects,” said a person aware of O’Connor’s visit.
Media spoke to more than a dozen people familiar with Apple’s outsourcing and the visit of its CIO, including top executives based in India and consultants based in the US, for this story. None of them came on record because they did not want to upset Apple officials. Apple has clauses in its contracts that lead to termination of orders if anybody involved in these engagements discloses information publicly.
An Apple India spokesman also declined to comment.
Between January 29 and 31, the Apple CIO met top executives at Infosys and Wipro, but both the companies refused to speak. For Infosys, Apple already contributes around $50 million in annual business. Wipro, which started working with Apple a few years ago on testing of software applications, is also growing its revenues from the company.
The low-profile O’Connor, who has been with Apple since 1991, led the global deployment of SAP software across the company and developed a strong backbone for supporting one of the most complex supply chains in the world.
For Indian technology firms continuously under pressure from customers such as General Electric, known for outsourcing more at lower rates, Apple is among the most desired accounts to have because of high
Apple’s internal IT systems form a secret sauce
“Apple and GE would make two extremes for the outsourcing industry – Apple handles even commoditised applications like its ERP with very high sophistication and treats vendors better,” said a person with knowledge of Apple’s software outsourcing.
Unlike many other companies, Apple’s internal IT systems form a secret sauce, much on the lines of how the company guards its future products and enhancements.
Apple, whose market value is around $460 billion, uses business software from enterprise resource planning application maker SAP.
Last year, research firm Gartner once again ranked Apple on the top of its annual ‘Supply Chain Top 25’ list.
Apple’s supply chain and its global partners have received a lot of attention of late: It has ongoing troubles with its supplier Foxconn’s challenges with employees in China. Moreover, it is still coping with the disruptions to its Japanese sourcing partners due to the earthquake, tsunami and subsequent nuclear crisis.
One of the top reasons for Apple to be so secretive about outsourcing to India is increased public scrutiny in the US of companies creating jobs overseas, especially at a time it has become difficult to save manufacturing jobs from going to China.
“Unlike many other consumer product companies, Apple never hints at outsourcing anything remotely connected with its product design – the work is pure-vanilla outsourcing in many ways. But then, it is the internal IT of the most valuable technology company in the world. Our teams would die to work at even half the salary,” said a senior official at a mid-sized Indian technology company.