Outsourcing has been a phenomenon among corporates for a long time. India continues to rank among the most favored outsourcing destinations, closely followed by China, the Philippines and Sri Lanka. The history of outsourcing can be traced all the way back to 1980 when Kodak gave IBM the task to build a data center for them. Both design and management were left to IBM.
Since then, many corporates have followed suit. However, as outsourcing became more prevalent, companies started looking at destinations that could provide them with quality work while also keeping costs in check. Initially, Asian countries were the preferred hubs with outsourcing companies in India getting a great deal of work, especially from the US.
Why Outsource To India
Consider a few business needs: infrastructure, lease, logistics, human resource, specific software, upgrades, etc. These are the spending aspects that a business has to invest in. If costs of some of these factors can be eliminated and costs of the remaining can be cut to half, can you imagine the kind of profit margins a company could be looking at? These are the precise reasons which led to the booming of the outsourcing industry. They are also the reason as to why outsourcing to India is a profitable proposition to companies based abroad.
India in particular has a talent pool that is known to be efficient. Moreover, Indians are good at spoken English which takes care of the crucial communication aspect, especially in the BPO sector. India is the second-largest English-speaking country which makes language efficiency obvious. Hence, businesses like banks, collection agencies, insurance companies, roadside assistance etc., that need customer service, frequently outsource to India.
India had been facing a technical brain drain for years. The talent pool of India was getting sucked into the international markets. However, with outsourcing companies now flooding the indigenous market, new opportunities have started to open up in India. To a large extent, this has been instrumental in retaining the talent pool in the country. Consequently, due to talent accumulation, the BPO as well as the IT sector in India are now flourishing.
For global companies, getting their work done by the outsourcing companies in India works well. India is a developing economy. For corporates based in the US, UK, Australia and other western countries, this means India is cheaper in every aspect in comparison to their own country. For instance, one of the reasons why India can afford to quote a lower cost of labor is the low cost of real estate. The office spaces which are rented for work are not as high as they are in Europe or the US. This makes it possible for outsourcing companies to get cost-effective labor that delivers quality work.
India has a prominent time difference with the US, UK, Europe and Australia. Sample this:
- India is 10 hours and 30 minutes ahead of the US,
- UK lags behind by 5 hours 30 minutes,
- Europe by 4 hours and 30 minutes and
- India lags behind by 5 hours and 50 minutes in comparison to Australia.
The difference in time zones between the continents and India gives the leverage to get work done 24X7. Moreover, India has developed customized business models that ensure customers and clients from any of these locations can be attended to at any time.
Perhaps one of the sole reasons why IT companies outsource to India to such a large extent is the fact that India churns out IT experts every year. While a chunk of this number inevitably leaves the country, the remaining stays back as global IT giants have been outsourcing work to India. Moreover, IT professionals in India get paid well. Technology know-how and expertise in domains like AI, data science machine learning, block chain etc. are areas that Indians excel in.
To enter the Indian business domain, companies outsourcing to India have to have ease of business in the country. The Government of India has policies and laws in place that encourage outsourcing to India. The intent is to make India the global outsourcing destination. India has the infrastructure, business model, scalability tools, technical know-how and language efficiency to be the perfect outsourcing hub. Outsourcing companies in India know the business elements that make this country a profit center for them. No wonder then that India continues to grow as an outsourcing hub.