Why is India still the hottest outsourcing destination?
India holds a share of 44 % of the global offshore outsourcing market for software and back-office services. You might be wondering how and why India is the most preferred outsourcing destination. Is it just hype? Or are there any valid reasons to it? Let's try to find out.
Why has India been the First Choice as an Outsourcing Destination?
India is a near synonym to outsourcing. India enjoys the confidence of major corporates and today has more than 95 countries outsourcing their work to her. More than 82% of American companies grade India as their first choice for software outsourcing.Everything worked well with India; the time she opened up her markets, the time computers came into India, the growth of technical expertise and the generation of expert IT & ITES professionals. And most of all, the population! India has the largest pool of software talent, IT & ITES professionals, and graduates. Not to forget their English speaking capabilities.
What is India's Value Proposition?
We can state a thousand odd reasons as to why you should outsource. But the most important reason will always be "Cost Benefits". The value proposition that India has is that you get high quality expertise at low costs. Why would you not choose outsourcing to India if you get 40% savings without having to make a compromise on quality?
Still, Why India?
If today, India is the most sought after outsourcing destination, the reasons are:- India 's growing market and conducive business environment.
- Biggest pool of IT brains with 120,000 trained IT professionals added to the industry yearly.
- Every year approximately 2.1 million graduates pass out of India's colleges
- Commendable work ethics practiced by Indian companies
- India has the largest English speaking population
- Cultural compatibility and friendly customer relationships
- Cost efficiency with quality
- Manpower and infrastructure
- Innovation and creativity along with intelligent solutions
Why is India Preferred Over China or other Outsourcing Destinations?
Nasscom says "25 percent of engineers in India have the basic skills for offshore IT jobs, compared to 10 percent each in China and Russia". Apart from cost benefits and technical expertise, there are certain significant factors which have and will continue to influence the world's choice of India for Outsourcing.- Political stability
- Favorable governmental policies
- Stable democratic government
- Mature legal system
- International reputation as a responsible nation
- Existence of h3 Regulatory Authorities to ensure security like NASSCOM
These are among those core positives which has made outsourcers come back to India with their work.
Will India sustain this growth in the future?
As Gartner says, India is still "head and shoulders ahead of its competition". Market experts and researchers say that India will continue to rule the market. Gartner predicts that India will continue to enjoy the lion's share of global offshore spending on IT services, which would be over $50bn by 2007. But yes, she will have to face challenges in the future:- China is emerging as India's major competitor in outsourcing
- There is a fear that the offshore industry in India will see the maturity stage soon
- There is a slight increase in the wage costs in India compared to China, Philippines etc
India's economy is growing at a rate of 7-8% a year. As the outsourcing industry is contributing more and more to the economic growth of India, you will also reap the benefits of increased efficiency and quality of Indian services.