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For US retail giant Walmart, home-grown e-commerce company Flipkart is the Indian jewel in its crown. The company, which recently got an infusion of $1.2 billion $1.2 billion Mint Flipkart raises $1.2 bn in Walmart-led funding at near $25-bn valuation Read more from Walmart, is the first stop for Walmart’s chief executive officer Doug McMillon and Walmart International CEO Judith McKenna whenever they are in the south Indian city of Bengaluru. But there’s a more critical cog in the Walmart wheel that’s just out of sight—the Tech India Development Centre that operates across Bengaluru, Chennai, and Gurgaon.

Simply known as Walmart Labs India, it employed 3,800 associates, mostly techies, in 2019. It is on track to cross 7,000 associates in India by the end of this year, doing cutting-edge product and engineering work for Walmart’s operations.

For instance, the technology stack that handles order fulfilment for Walmart’s US operations is run out of India. A big chunk of its US business comes from online orders that customers can pick up from stores, says a Walmart Labs manager, requesting anonymity as he’s not authorised to speak to the media. “The inventory management system to handle that kind of complexity and scale was built in India and run from here,” he says. Walmart Labs did not respond to multiple attempts by The Ken for a statement.

Rival Amazon also has a development centre that employs more than 10,000 people in India. In fact, multinationals run 1,400 such development centres in India, according to ISG, a global technology research firm. Also known as “captive centres”, these are subsidiaries owned (hence ‘captive’) and operated by companies in foreign locations, providing service resources directly to the organisation. At least 70% of the development centres in India belong to enterprises headquartered in the US, according to headhunter estimates.

India leads the global pack in the development centre segment, ahead of the Philippines (700) and China (450). There’s another thousand dispersed across the Asia-Pacific region, according to ISG. In India, these technology development centres mushroomed in several waves since the late ’90s.

The first wave saw the outsourcing of IT applications maintenance and support projects to Indian IT majors such as Infosys and Wipro. The second wave came after the financial crash of 2008, which proved pivotal for American companies that were looking at India for its development centres. But, two factors in the past quarter have left this offshore cluster in limbo.

First, the COVID-19 pandemic has caused revenue uncertainty across industries, potentially eroding the viability of development centres if demand weakens drastically in the US.

On the other hand, the protectionist mood in the US in an election year could make development centres even more important. On 22 June, US President Donald Trump instituted instituted The Economic Times Trump signs order to suspend H-1B, L-1 visas till December Read more restrictions on nonimmigrant visas, barring the entry of additional workers through H-1B, H-2B, J, and L nonimmigrant visa programs until the end of 2020.

AUTHOR

Kunal Talgeri

Kunal is a Bangalore-based business journalist who has dabbled in editing and reporting since 2001. He has covered the technology industry for the Indian editions of Fortune and Forbes, as well as The Economic Times. A commerce graduate, Kunal also studied at the Asian College of Journalism, Chennai.

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