Why Outsource to India
?
A computer programmer in the US costs IBM $56 an hour; a programmer
in India or China would cost no more than $12.50. What would
business firms do? They would definitely outsource their jobs
offshore. A Forrester Research has predicted that 830,000
U.S. service jobs would move to low-wage countries such as
China, India, and Mexico by the end of 2005. Forrester had
surely made an underestimation; the figures have already crossed
the mark a long way back.
Forrester's well-cited projection of 3.3 million US services jobs moving offshore by 2015 will increase slightly to 3.4 million.
According to the Forrester’s research, several factors fuel the sudden interest and the rapid increase in outsourcing activities, like:
- Ramp up of existing offshore clients: Earlier it was a case of just a small 5 percent of Fortune 1000 firms exploiting the cost-cutting advantage of offshoring, but in the past one year or so many firms that experimented with small outsourcing projects have shown a strong commitment, driving the growth of the trend. Many of these firms have increased their spending in the course of their migration offshore, as they have to put the processes in place to manage the remote IT and business operations.
- Top-tier offshore vendors with new services: Satyam, Wipro, and Infosys, the leading suppliers from India, are expanding their services beyond just application maintenance. They have made their forays into business process outsourcing (BPO), remote monitoring and administration of infrastructure and packaged application implementation, enabling them to capture a lion’s share of the total IT services' spend.
- US-based vendors with extended offshore potentials: The big services and technology vendors like IBM and Accenture have found a better alternative in expanding their operations in India, China, and the Philippines after facing the enormous customer and competitive pressure. These two companies alone have added more than 9,000 jobs in India by the end of 2005.
- Offshore, the main driver for a BPO: Access to low-cost offshore labor is no more a primary driver for the hard core IT business alone, it has fueled the growth of the BPO trend as well. The prospects’ demand for an offshore component for a BPO even from the onshore vendors has paved the way for IBM's acquisition of Daksh in India.
- Firms running captive operations: Many firms have achieved maximum cost savings in their offshore activities by running a number of "captive" back-end operations in places like India, themselves. They have successfully yielded near-term savings by outsourcing many back-office jobs like accounting and claims processing offshore. This way they don’t have to go through a third party or wait for the vendors to acquire the necessary skills.
- Second wave phase of the new verticals: Closely following on the heels of the IT-intensive industries, new verticals like electronics and manufacturing that have a high spending on IT revenue have already jumped into the offshoring bandwagon.
Advantage India:
- Talent-rich country
- Exports software to 95 countries around the world
- Enjoys the confidence of global corporations
- State-of-the-art technologies for total solutions
- IT is a major thrust area for the Government of India
- Stable government
- One of the world's 10 fastest-growing economies
- Significant cost saving
- Large pool of computer literate and English speaking professionals
- Quality standards meet the approval of the world.
Below are six key provisions that any outsourcing agreement should have to help mitigate unavoidable problems when they occur.
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Outsourcing: Advantage India 
