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
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