Promises and Perils of Sourcing from India

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.

Working culture
Sourcing from IndiaThis 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.

How Indian Outsourcing Companies are Changing Outsourcing

The Indian outsourcing companies took some time to appear among the top companies offering outsourcing services. However, today, they can be seen on the top ranks which clearly indicates the country’s growing prosperity on the global economic map. These companies had to cross a number of barriers and many of them are still on the other side of the fence. It will take time for more outsourcing companies from India to join the ranks of top service providers.

The following article is covers outsourcing companies from India and how these companies are making a place for themselves in the global outsourcing industry.

Main outsourcing sectors
The Indian outsourcing companies in the information technology sector have had exponential growth by grabbing numerous outsourcing jobs from global companies. These companies are involved in providing products and services related to custom software development, website design and development, software testing and ecommerce application development.

Furthermore, the information technology industry has outsourcing companies that provide web analytics services. Other companies belonging to the same sector are those offering data entry and data processing services. Another sector that has contributed toward the growth of outsourcing companies in India is the healthcare sector. Medical billing, medical transcription and healthcare software are some of the services that these companies offer.

The Indian legal outsourcing companies have also recorded growth in the past few years. The number of these companies increased from 40 in 2005 to 140 by the end of 2009. As per the estimates, these companies are expected to have revenues fin excess of 1 billion dollars by the year 2014. Legal documentation, litigation support and drafting and analysis are some of the services that legal Indian outsourcing companies offer.

Another outsourcing sector in India which is worth mentioning consists of financial services. These include accounting services, payroll services, tax preparation, bookkeeping services and insurance services among others. Other outsourcing sectors that are constantly increasing in numbers of companies from India include the transcription industry, sales and marketing and the tourism industry, among several others.Indian Outsourcing Companies

Companies that made it into the top 100
The list of top outsourcing companies from all over the world is created based on a number of outsourcing parameters. While the size of the company is an important parameter, many other parameters are used to include performance during a specified time interval, management capabilities, customer reviews, competencies showcased by the companies and many more.

In the year 2010, a number of Indian outsourcing companies successfully had their names among top outsourcing companies internationally. Infosys Technologies, an information technology giant, ranked in second position based on executive leadership and core competency. Wipro Technologies is another powerful information technology services company from India and acquired the 4th rank in the list. Management capabilities are considered the key strength of the company.

Tata Consultancy Services, which is again a reputed software services consulting company from the country, was 7th. Employee management is one of the most dependable aspects of the company. Affiliated Computer Services, a premier BPO and IT outsourcing Indian company, made it to 11th on the list.

Some other Indian companies that were among the top 100 outsourcing companies of 2010 include names like Genpact, Neusoft, HCL Technologies, MindTree, Tech Mahindra, Mastek, ITC Infotech, Patni Computer Systems and many more.

It is worth mentioning that the Indian outsourcing industry is not solely dependent upon the US economy, though it is a popular belief of many. The strategic location of the country makes its services available to the Asian countries as well as those in the Middle East. The upcoming Indian outsourcing companies need to cross the barriers related to infrastructure and other aspects to reserve more positions in the list of top outsourcing companies.

The Pros and Cons of Outsourcing to India

With outsourcing to India gaining popularity in countries like the US and the UK, it is important to assess the pros and cons of it. Starting with the back office operations in the early 1980s, the outsourcing process to India evolved in the new millennium. This has expanded with the growth of software development and web designing projects outsourced to India. Finally, the rise of the BPO (business process outsourcing) industry strengthened the concept and cemented the trust of global companies in the Indian outsourcing community.

However, there has been a constant debate as to whether outsourcing jobs to India has as many cons as it does pros. The following are some of the postive as well as negative aspects of outsourcing to India.

Available infrastructure
If one goes back to the early 1990s, the Indian infrastructure available to the foreign companies outsourcing to India suffered from a number of flaws. Lack of telecommunications, for example, was one major drawback. Its high costs and unreliability made doing business in India much more difficult.
The things have changed drastically in the past 10-15 years. Telecommunications, for example, have been upgraded are now provides the infrastructure that allows outsourcing to grow. An exceptional change has been brought by the growth of IT infrastructure, which is currently capable of catering to most demands of outsourcers. However, as a lot more improvements are still needed, this con has a way to go before it becomes a pro.

Skills and Talent

This aspect should be counted among the pros of outsourcing to India. Any company considering outsourcing a job related to most particular skills can find thousands of people willing to take it and complete it in a very efficient manner. Implementation of the modern technologies and conceptualization of innovative ideas can be expected from the talented workforce in the country.

English speaking capability
This aspect can be considered as a pro as well as a con. There are a greater number of English speaking people in India than in any other Asian country. However, the problem lies in the issue of accent, which bears a regional influence. The solution, which many Indians who want to work for foreign countries resort to, is opting for accent training, which can be easily availed from one of the many language institutions located in different cities across the country. Those who are talented are definitely willing to undergo such training programs to get absorbed in the workforce of these outsourcing companies.

Difference in culture
There is a huge difference in the culture of India and the countries like the US and the UK. However, these differences do not have to have a deep impact on the way outsourcing businesses are conducted. One can see a number of cities like Bangalore, Chennai, Noida and Hyderabad following similar working culture as followed in the developed countries. Moreover, the outsourcing companies in India reserve a sufficient deal of money to invest in cultural training (similar to English training).

Time zone differences
While it can make communication difficult on occasion, time differences can be a pro as far as the process of outsourcing to India is concerned. A company in the US, for example, provides work to an Indian outsourcing company when it is daytime in the US. Indians start working during night hours of the US. This forms a 24×7 working schedule that helps in the on-time delivery of projects.Outsourcing to India


Cost factors

Cost is undoubtedly the most important of the factors that draws global companies to the practice of outsourcing to India. However, the countries in rivalry, including China and Taiwan, are making attempts to cut their costs further. Even then, the Indian rates are often considered as a benchmark to compare the rates offered by other countries. The cost factor is and will remain a pro for the outsourcing concept.

Outsourcing to India is often regarded as a double-edge sword and there are personal opinions on whether outsourcing pros weigh the cons or vice versa. In actuality, the answer may vary with the industry. Every company needs to look at the big picture and decide what is best for them.