Sourcing from India fast became a popular phrase as soon as the Indian economy started following policies of liberalization in 1990s. The practice enabled foreign companies to exploit the efficiency and advantages that India offers.
Apart from manufacturing, the metalwork, electrical, hydraulic and plastic industries are among the major product sourcing industries in India. Additionally, the call center, business process outsourcing and software development industries in the country are fine examples of the service sourcing sector.
However, there are problems with Indian sourcing too. The following is a look at some of the pros and cons of sourcing from India to help people understand both sides of this concept.
Growing economy and intended super power
India, apart from China, is a strong contender to become an economic superpower within coming decades. The economic development of the country has been much talked about over the past few years. This factor has maintained the trust of global companies in sourcing from India.
Skilled and low cost labor
India has a huge pool of skilled workers who work in different industrial sectors. Apart from being highly schooled the labor is available at a cost which is much lower than what the labor forces of more developed countries command.
However, the problem of attrition has been plaguing this advantage. Employees in India have a generally more open attitude towards switching jobs frequently. This trend is more pronounced than it is in Western countries and can be considered a serious con of sourcing from India.
The cost of sourcing work from India is no longer restricted to low-wage work, especially in case of software development industry. The sourcing of Indian products and services is getting more expensive with time to the point there are countries that have comparatively lower cost advantages.
High-end research and development
There are excellent opportunities to carry out the research and development work for different industrial sectors in the country. The cost of research and development in the country is much cheaper than what is required in other countries.
English speaking population
Another good reason, which is credited for the popularity of sourcing from India, is that a huge portion of the Indian population can speak, write and communicate in proper English. This is one big advantage that the country has over China and other countries with non-English speaking populations.
Availability of infrastructure
It should be noted that Indian infrastructure still needs a lot more investment and is lagging when compared to China. Lack of sufficient infrastructure, combined with excessive bureaucracy and problems with corruption, are continued drags on the Indian economy and will likely remain so for the foreseeable future.
This should be considered as a drawback of sourcing work from India. Relatively simple problems such as the need to clarify a process can bring work to a standstill. As a result, the overall productivity and turnaround times can be seriously affected.
The country has a huge manufacturing base to boast of. This is an advantage in various manufacturing sectors, including automobile manufacturing and electrical manufacturing. While textile and other more traditional industries remain important, India is poised to do well in more skill-based manufacturing in spite on its problems with power and other infrastructure.
More developed economies are looking to maintain low cost bases, and India is one of the best choices for many of them. A unique aspect of Indian sourcing is that foreign companies are more focused on developing partnerships with their Indian counterparts rather than starting rivalries with them.
In order to make sourcing from India a growing global phenomenon, it is important for the Indian industries to work on their drawbacks. This will make India more attractive and certainly contribute to its economic development.