Why India continues to be the preferred destination to outsource

Outsourcing was considered a taboo in its early days, but slowly it is proven as one of the most significant business models.

The rosy days of the global economy are gone and so, while, lowering financial liabilities, organisations have to sustain the quality of service and employ a workforce that is economically affordable and efficiently skilled.

Many countries like China, Malaysia, Philippines, Mexico, Indonesia, and Thailand are rapidly growing as preferred destinations for global outsourcing, but India leads the race by a wide margin since the inception of outsourcing.

So, let’s see why and how India managed to remain in the spotlight.

Cost Effectiveness

Every business strives to be as cost effective as possible, and one of the best ways to cut down on operational costs is to reduce manpower expenses. India qualifies well on this metric and hence attracts foreign companies to invest here, as resource wages are comparatively lower as compared to other countries.

With low labour costs, immense human resources and excellent infrastructure, offshore companies can invest and expect their projects to be completed with high quality and minimum expenses within strict deadlines.

Skilled, Professional Manpower

Currently, India has about 2.75 million software developers in the national workforce. By 2018, this count will reach 5.2 million, a whopping 90% increase.

India’s software development growth-rate is attributed to half the population being under 25 years of age and current economic policies. India is a budding hub of developers and coders, promising to provide world-class services to outsourcing companies.

Apple Inc., the leading technology giant, is looking into setting up a company-owned, technology development centre in India. If this happens, Indian software development prowess will get a huge endorsement. It will be an inspiration for more companies to enter Indian shores for business.

Lack of Language Barriers

In India, English is a compulsory language at school and college levels. A large number of Indians can understand and communicate in English easily.

IT firms have recognised that communication skills of individuals and organisations should comply with international standards. The BPO industry is training its employees to improve interaction skills with offshore customers for business success with special, communications and language training.

Innovating the Business Model Itself

Traditional strategies to maintain profit margins in businesses are losing effectiveness due to soaring competition. A well-designed business model can circumvent the shortcomings of those strategies.

Development based on any traditional business model can fail to protect your margins because of globalisation and price transparency. Indian companies have realised that time spent putting together a solid business model is time well spent.

According to a report by KPMG, the Indian IT services industry is expected to rise from £5 billion in 2000, to  £56 billion in 2010. After contributing significantly to India’s economy over a decade, it has been speculated that new business models will emerge to deal with a rapidly changing marketplace and customer needs.

Innovative Tools for Managing Innovative Teams

Companies are hiring highly qualified and competent people across the globe. Members of geographically diverse offshore teams are working in tandem by using online project management tools, video conferencing, and other media for real-time communication and collaboration.

 A Stable Government and Attractive IT Policy

The Indian IT market currently focuses on providing low-cost solutions to the global IT sector. India’s reputation, as both a source and a destination for IT and ITES workforce, has helped it improve its relations with a number of global economies.

The stable Indian government is offering safe harbour (SH) provisions for various software development services, ITES and knowledge process outsourcing services . The government is initiating several programmes to fulfil India’s vision of good e-governance and digitalisation.

The Indian government’s call “Make in India” is already attracting lots of interest among foreign companies to invest here. It’s been predicted by aircraft manufacturer Airbus  that the Indian outsourcing industry will reach £1 billion with the recent positive impetus.

Conclusion

Mr. R. Chandrashekhar, President, NASSCOM says, “The future looks positive as the Indian IT-BPM industry is evolving dramatically in terms of scale, complexity, and innovation. Going forward, enabling a radical transformation of key sectors in India using ICT to increase access, enhance efficiency, and enable innovation in the sector are going to be some of our priority focus areas. The rapidly accelerating trend of innovation and entrepreneurship in the ICT sector impacts several domains and provides clear indicators that the journey has begun.” [image]

Some places in India where talent is being reared, are a striking contrast to the mediocrity of their surroundings. With the astounding growth of Indian IT and ITES industry, rapidly changing economic scenario, development of SEZs, and availability of the skilled human resource, the global offshore business will grow significantly in the years to come.

Have you outsourced to India yet or plan to do so? Let us know in the comments below, and thanks for reading!