Scope of Business Outsourcing to India

Outsourcing is one of the fastest growing industry on the world platform. It mainly involves transfer of components or large segments of the companies' internal production processes, businesses, infrastructure, etc. to the external service providers. It can cover a wide range of components depending upon the core competency and the requirements of the outsourcer. It may be broadly classified into information technology (IT), human resource, customer service, engineering, knowledge services, legal, R&D outsourcing, etc.

Owing to its advantageous factors like presence of one of the world-best intellectual and internet resources, lower cost structure, multi-lingual capabilities, etc., India has emerged as the 21st century's software powerhouse, offering many advantages as a global sourcing hub, especially for IT enabled Services (ITES) and Business Process Outsourcing (BPO). The main motive behind outsourcing has been that it allows a company to invest more time, money and human resources in core active items without losing quality and name. Call centres have also mushroomed in India serving various foreign airlines and banks.

Further, economic success of the BPO industry has taken many firms to their advanced knowledge work to off shore destinations. Knowledge Processing Outsourcing (KPO) is one step extension of BPO and can be defined as high added value processes chain where the achievement of objectives is highly dependent on the skills, domain knowledge and experience of the people carrying out the activity. The KPO typically involves a component of BPO, Research Process Outsourcing (RPO) and Analysis Proves Outsourcing (APO). United States (US) and United Kingdom (UK) are the key markets for Indian IT-KPO exports.

As a result, India continues to dominate global outsourcing market with market size estimated to be worth about $52 billion. Banking and financial services contribute nearly 40 percent to India's outsourcing industry.

At the Central level, the Department of Electronics and Information Technology, under the Ministry of Communications and Information Technology, is the main authority responsible for the overall development of outsourcing in India. Accordingly, separate Departments of Information Technology have been set up in the States/ Union Territories. Both Central and State Governments as well as private sector/ MNCs have been making continuous efforts to develop this industry on a sustainable basis. But, they still need to develop the adequate talent base, provide technical knowledge and design appropriate training programmes for BPO employees, incorporate proper health care policies as well as implement safety measures, especially for women.

India has become one of the most sought after destination for the companies wanting to outsource their business, knowledge, research, legal and related high-end processes. This not only boosts exports, increases national income and creates greater employment avenues, but also increases tax revenues, caters to the growth of other related industries like infrastructure, catering, etc. The companies involved in outsourcing activities tends to earn huge profits out of this and thus, are in a position to offer their employees the good and competitive pay packages, along with many attractive employee benefits.

Business outsourcing in India has gradually become one of the well known business sectors in the country. The main reasons behind the growth of the industry are the economic liberalization policies undertaken by the government and the globalization. To cater to the growing demand of consumerism and the rising market, more and more foreign companies are outsourcing to India. 

The availability of skilled manpower and cheap labor rates have attributed to the growth of the outsourcing business in India. The outsourcing business has also become one of the main generators of employment for the youths and the freshers. According to recent surveys, around 0.7 million people work in the business outsourcing sector with an average wage growth of around 10 to 15 % annually.

Reasons why more companies outsource to India

There are a number of reasons why more and more foreign companies are starting outsourcing businesses in India. Some of the main advantages of India as an outsourcing destination are flexibility, technological competence, quality output, cost control facilities, time-to-market and so on.

According to recent surveys, around 82 of the major US companies have said that India is their first choice for outsourcing. With the development of the economy, the number is expected to rise. Renowned entrepreneurs like Bill Gates have hailed India as an IT superpower with immense expertise and competence.

Some of the major segments and assignments that are outsourced by most companies to India are:

•          Business Process Re-engineering

•          E-Commerce

•          System Migration

•          Maintaining Legacy Systems

•          System Integration

Apart from these, other specialized jobs are also done according to the skill set and the type of output the company is looking for. 

Welcome to Global Company Formation

Pearl Outsource is a part and parcel of Pearl Business Start up and is a market leading Outsource Consultancy and Facility Provider. Our online resources range from an expert online Maths Tutor to a Senior Accounting Professional ready, at a click away, thereby covering almost all areas of intellects, vulnerable to the latest technology.

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Mathew Stephen FCA, AAIA, CeFA

Mathew Stephen is the founder Director of Global Accountancy Services. He is a qualified accountant from the Association of International Accountants in the UK and the Institute of Chartered Accountants of India. He is also one of the partners of international Chartered Accountants firm P. Parikh & Associates. He has 20 years’ experience in accounts, business consultancy, taxation & statutory audit. He is also a UK Independent Financial Advisor (IFA) and CeFA qualified at the IFS School of Finance.

He has won the Online Technology Award in two consecutive years, 2011 and 2012, from the Tenet Network. He specialises in Global Company Formation, International Taxation and also as Corporate Protection Advisor to the directors of Limited Companies.