Body Shop Supplies

Body shops is a term that refers to modern day information technology (IT) manpower supplier companies with their ability to respond, deploy and cater requirements for skilled IT labourers. more...

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Due to the large pool of such companies operating across the globe with its Indian origin or operational base, there is general tendency to refer Indian IT companies operating abroad as body shops or body shoppers or IT-sweatshops.

History & origin

Body shopping in IT originated during the Y2K period 1996-1999 where there was huge demand and clamour for people with Mainframe, COBOL and related technology skills to solve the bug of the century, called Y2K.

Most specialist Y2K consulting companies operated in US, Europe, Middle East, Japan & Australia outsourced their manpower requirementS to India's now global IT forerunner companies such as Infosys, Wipro, Tata Consultancy Services etc . During 1996-97, these companies responded to the demand by heavily recruiting and training local graduates in India specifically for Y2K. Their consultants either worked onshore or offshore at 95% utilization rate generating very high margins. The high profit margin during this period resulted in excellent growth and a huge cash assets to expand operations to other IT business segments post-Y2K season. These companies growth strategy still continue to focus on similar lines, which is, developing IT skills for a changing market place and catering skills demand of the customer.

Operational model

'Body shops' operate either offshore, onshore or nearshore and respond dynamically to their clients IT skills demands with less turn around time by supplying people to work directly for their client's project management team.

Some Body shops operate through intermediatery companies due to their inability to get direct business contracts for supplying people to the end-clients. In such cases, intermediatery companies will take a percentage cut from the negotiated daily billing rates.

Personals who are body shopped are vital for a bringing a longstanding relationship with the client. For this reason, Body shopping companies prefer to recruit and operate with experienced people.

Revenue model

Most body shops maintain a very good relationship with their client and they continue to work on building further revenue streams by analysing client's immediate or future IT skills requirements for supplying resources.

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 offseted 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.

Read more at Wikipedia.org