What if … outsourcing to India worked?
India has evolved to be the key destination for IT and business processes, and while 70% of the European companies have outsourced at least one process to Indian companies about 5% of them have delegated more than 5 processes. The burgeoning Indian outsourcing market has been inviting companies from the European marketplace to invest in outsourcing.
It would be interesting to note when the concept of outsourcing started becoming popular not just in India, but the rest of the world as well. Though we do not know about the exact date, it can be said that the concept of outsourcing came into existence after the second word war. Though the concept was not so modern and widespread as it is now, companies were doing certain specific jobs for other companies, for example data handling. Perhaps the success of outsourcing between India and European countries is probably because there are a lot of similarities between the two countries, especially in their way of thinking and their way of conducting business. Over the years, certain differences have started rearing their ugly head, but even so both the partners have learnt to shove aside the differences and find a mutual platform to conduct business. Other drivers that stimulate a strategic partnership between an outsourcing company and an outsourced company are
- Corporate strategy
- Political stimulation
- Government policy
While outsourcing to India it is possible to reduce the cost (for European companies) by paying less remuneration
Outsourcing to India gained momentum when the fact came to light that the country offers excellent talent pool at low cost when compared to foreign markets. Nevertheless, it is always crucial to find the best team to outsource your work. Though the capacity of the people in India to speak English fluently and the low cost of labor have been encouraging European companies to invest in outsourcing to India, it is important to find educated and sufficiently informed team of employees. The total cost of hiring employees in India was about 80% less in the beginning, but this is narrowing fast as India is ‘on the increase’. Even so, many companies in the Europe are hiring people from India, thanks to the rich repository of excellent analysts and product developers that the country still holds.
Less infrastructure cost while outscoring to India
Another reason for the success of outsourcing to India is because of the less infrastructure cost faced by the companies in Europe. Once they outsource their services to India, European companies need not focus on improving their infrastructure or keep investing on it as and when they get depleted. India is rich in infrastructure and European companies can make the best use of the same.
There is more flexibility in scaling up operations
As India has one of the biggest talent pool of people with technical acumen, it has been easier to scale up operations in the country. Several of the main IT companies in India are leveraging this cost advantage and are investing with better returns. By scaled up operations, it means the country has the sufficient resources, people, talent and technology to provide what its European counterparts require. Companies in India are constantly scaling up operations to fit in with the growing demands of European companies.
India has the richest resource of developers
India has some of the talented developers and is placed second in developer population. Google has pointed out that Indian has three million coders already and this number is said to increase by 2018, with four million developers. Indian is the third country in the world to produce the most number of mobile apps, the first and second being US and Europe respectively, as per the reports published by Internet and Mobile Association of India. As Indians are willing to work around the time zones of people living and working in European companies, it has been easier for people to hire Indian developers. Many of the companies in Europe are hiring full time developers from India and managing them remotely.
Investing in India makes it competitive
With the new initiatives by the Prime Minister of India, Shri Narendra Modi more and more investments are being made by the European countries to companies in India. The purchasing power in India has also improved the markets in Europe, making India a globally competitive field in IT, tourism and hospitality industry. Currently, more than 60% of the companies in Europe prefer to outsource to India, probably because India maintains high quality standards even in times of work pressure.
The debate on whether it would destroy the jobs for natives in Europe is still going strong. Some Europeans believe that it is indeed destroying the prospects of qualified Europeans in the native country, but they still agree that it is possible to get cheaper products from India. Certain Europeans believe that the European companies keep the well-paid jobs in their own country while outsourcing other jobs to India. Irrespective of what others may think and say, outsourcing to India has worked tremendously well in the country and it has been good for the country as you have Euros, Pounds, Swiss Francs and Dollars coming.
Interesting links about the topic:
Pictures: Flickr.com/ Jarvis/ GotCredit/ Money
The author: Reema Oamkumar is engaged as a thought leader at Software-Developer-India.com which is a part of the YUHIRO Group. YUHIRO is a German-Indian enterprise which provides programmers to IT companies, agencies and IT departments.