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INDIA AND

OUTSOURCING

Now, we are in a borderless world, in which both thought and works are borderless. The

concept of global village has become a reality due to the telecommunication revolution.

Business activities have crossed the boundaries of geographical distances. Every country, both developed and developing is

taking full advantage of this borderless market to exploit its resources to the best

use and grow economically strong. As a result outsourcing is now hot in India also.

INTRODUCTION

Outsourcing is subcontracting a process, to a 3rd Party company being

specialized in it.

WHAT IS OUTSOURCING?

OUTSOURCING - TYPES

There are three types of Outsourcing.Offshore Outsourcing: that is

contracted outside a company's own country

Onshore Outsourcing : that is contracted with the company's own

country.

Nearshore Outsourcing : that is contracted to a company's neighboring

country

36%

36%

13%10%4%1%

Reduce Operating Cost Focus on Core Business Improve Quality

Increase Speed to Market Foster Innovation Conserve Capital

WHY DO COMPANIES OUTSOURCE?

OUTSOURCING- INDIA

India holds a 70% market share in the world wide Outsourcing market.

More than half of fortune 500 companies outsourced to India.

2010: $150 billion

Contribute 1% to the GDP growth.

INDIA- OUTSOURCING CHRONOLOGY

AIRLINESEarly 1980s-several European airlines started

using Delhi as a base for back office operations, British Airways being one among them. The BA

captive was finally spun off as a separate organization called WNS Global Services in 2002

AMEXLate 1980s- , American Express consolidated its JAPAC (Japan and Asia Pacific) back office

operations into New Delhi and NCR region. This centre was headed by Raman Roy, and has

been a source of several leading names in the Indian BPO Industry.

GENERAL ELECTRIC1990s – General Electric started back office operations in India (@ Gurgaon) -GECIS (GE Capital International Services) . Hired Raman Roy and several of his management from American Express . In 2004 GECIS was spun off as a separate legal entity by GE, called Genpact.

THIRD PARTY BPOS1999 - Daksh eServices in Gurgaon-

email support service.2000- Efunds started in Mumbai and

Gurgaon2000 - Raman Roy quits GECIS to set

up Spectra mind in Gurgaon. Customer Asset and 24/7 Customer

setup shop in Bangalore.

ENTRY OF IT MAJORS2001 – Dell, HSBC, standard chartered,

HP, Lead the boom.2002 – Wipro acquired Spectramind.

2002 -Infosys, HCL, Satyam, Patni2004 – WNS becomes first Indian third

party BPO firm to hit $100 million revenues .IBM buys daksh for $130

million.

2005- onwards – Genpact,1-one source, WNS, Convergys, HP… integrated IT and BPO services.

Infosys, Wipro, IBM Accenture etc

WHY INDIA

Large pool of highly qualified and English speaking force Low cost of labor

Appropriate time zone difference with the west

WHY INDIA

Educated employs. Large number of qualified workers

Proven to be the best in the IT and computer software fields

Produce around 100,000 engineers annually .

Infrastructure: Telecom facility Power sector.

WHY INDIAGovernment:

Realize potential for economic development

Liberalization, Privatization and Globalization-1991

Favorable policies have turned India in to BPO/IT hub.

e.g.- Investment promotion, Telecom policy, IT act.

OUTSOURCING COST PER HOUR.

U.S. - $27Canada - $22Mexico- $18Carrabien- $16Philippines - $15India - $1267-72% of costs to call centers operating in the US/UK is directly linked to man power

costs. India only spends 33-40% of costs on man power. This includes training, benefits

and other incentives for labor.

1. Size of Indian Population2. Improvement in Education3. Dreaming of Foreign Jobs

4. Respectability and Job Satisfaction

WHY INDIA? THE OTHER SIDE

U.S : 59% Europe, mainly U.K. : 27 % Asia-Pacific :9%Rest of the world :5%

WE DEPEND ON

OUTSOURCING TO INDIA

BPO : Business Process Outsourcing

CRM, Medical Transcription, Call Centers

ITES : Information Technology Enabled Services

Software development, Data entry, Programming,

Web development services

KPO : Knowledge Process Outsourcing

Financial Analysis, Legal Services

CURRENT TOP INDIAN RANKERS

1) Infosys (2)2) Wipro (4)3) TCS (7)4) ACS (11)5) Genpact (20)6) Neusoft (26)7) HCL (32)8) iGate (35)9) Mind Tree (43)10)TechMahindra (44) source: International Association of Outsourcing Professionals

http://trak.in/tags/business/2010/04/23/top-best-100-outsourcing-companies-2010/

Improved Indian economy primarily by

employing a large number of people and

maintenance of infrastructure. It is

because of the outsourced projects that people at large in India

get opportunities to know and work in MNCs. BPO companies also

provide ample opportunities for women and as such help them in

their liberation and liberalization.

Losing many traditional and

cultural benefits. The outsourcing companies and

projects emphasize on the

foreign cultural values

IMPACT OF OUTSOURCING IN INDIAN ECONOMY

Over dependence on outsiders job is risky because of the uncertain world of politics are controlling the economics. A war or a foreign

policy decision may snatch the outsourcing job.

For e.g.; as the US unemployment level is rising, the American politicians are bringing out more proposals that appear to limit the use of

offshoring.  In Europe unemployment is not much better with especially Southern European

countries suffering from rates up to 21,3% in Spain.

RISK IN DEPENDING ON OUTSOURCING

Emergence of competitors including Brazil, Philippines, Mexico, Canada, China and

Ireland. The emerging cloud sourcing market will

cause the destruction of the outsourcing market

We cannot imagine what would happen to the millions of Indian youth engaging in the

outsourcing job as the government would not be able to provide an alternative.

Till date, outsourcing has done wonders for the Indian economy within a short

period. But over dependence on outsourcing job is risky and may make our economy vulnerable to unexpected

shocks.The policy makers should convert these resources for infrastructure and human capital development for the long lived economic growth and development of

the nation.

CONCLUSION

THANK YOU FOR YOUR SUPPORT!

By SHAMEER P H FUS 100603 DEPT OF FUTURES STUDIES