In a recent survey conducted it was found that 80% of the US and European companies prefer India as their favorite outsourcing destination for various services. The survey was backed by the prestigious Indian non-governmental trade association and advocacy group NASSCOM which also reported that around half of the Fortune 500 companies prefer to outsource their software development activities to Indian companies. Despite the stiff competition being put by many other countries including Mexico, Philippines, China, and Ireland, India has still managed to remain the first choice as the outsource destination. Some of the major differentiators which set India apart amongst its competitors are the favorable government policies, steady economical growth, vast talent pool, and young and talented workforce. These favorable factors have pushed India’s IT Industry outsourcing growth by 25-30% every year.
major factors that have enabled businesses to prefer outsourcing?
The emergence of technology
Technology is evolving every day. Why spend millions of dollars on a niche technology when all the latest technologies, tools, and frameworks are easily available through outsourcing. Besides, you neither need to hire a new workforce to manage it or spend periodically on maintaining and upgrading the tools. Majorly all the reputed outsourcing companies usually subscribe to the latest technology and development tools required for all the projects as well as staying ahead of the competition. Hence, you can always have access to the latest technologies without any nightmarish costs and hassles of using them yourself.
Increasing competition
Increasing competition has compelled the global players to shift attention to their core business operations and marketing of their services which requires a huge budget. Hence outsourcing of processes such as Accounting, Payroll, Taxation, etc. not only leads to huge savings but also supports businesses to shift their attention on core business operations.
Expensive labor
Operation costs constitute the majority of the expense percentage for any organization. Most of the foreign companies are outsourcing tasks overseas to save money and cut down the labor and operational cost as the outsourced employees are far cheaper compared to their first-world counterparts. Also, the third-world countries comprise a highly educated population with higher dedication and commitment towards the work.
Time zone advantage
Outsourcing services to India provide time zone advantage helping companies to stay ahead abreast of competitors by quickly marketing their work. For example, the 12 hours time difference between US and India provides numerous benefits to companies such as early completion of work, higher efficiency, and productivity, as well as offering ample time to focus on many other essential tasks. Additionally, they also get the advantage of 24X7 customer support and help desk services.
Reducing operational costs
Low operational costs are one of the primary reasons why foreign companies choose to outsource their projects/work. It leads to significant savings as well as has a definite impact on the company’s revenue recognition.
Sharing risk equally with a partner firm
In these uncertain times, outsourcing contracts offer a sense of relief and protection for both parties ensuring successful completion of operations within the contract deadline. This also mitigates the stress of cutting down human resources or any nasty human conflict between the organization and employees during adverse business situations. Moreover, outsourcing companies are committed under legal contracts and can be held accountable for any kind of negligence further encouraging the outsourcing drive.
Why companies choose India as their favorite destination?
India is the fastest-growing economies in world and at the cusp of becoming the global leader. Previously, India was preferred for outsourcing only the backend work such as data entry or customer support but now the country is competent enough to handle complex turnkey projects such as business intelligence, e-commerce, digital marketing services like website development, App development, graphic designing, etc. Other services include legacy system maintenance, system integration, maintenance services, and business process re-engineering. Two major reasons why India is the most preferred outsourcing destination as mentioned below.
Low labor cost
The primary reason why India is the most preferred outsourcing destination is due to the significant cost savings offered on labor costs. There is a huge difference in the wages of the Indian workforce as compared to many other developed countries. For example, a good developer in the US may charge $50 to $80 per hour however the same full-time resource can be negotiated to as low as $15 per hour. This flexibility in pricing gives freedom to companies to choose from various options available in the market as per their budget and scale.
Easier to communicate with Indians in English
Communication is the key for the successful delivery to any project whether working with an onshore or offshore team. The vendors should resolve customer queries promptly. Great communication skills should be spot on without the hassles of any kind of barriers. India is already ahead in the communication field as compared to its counterparts.
Even though English is not the native language of India however the majority of the young population is proficient to communicate in English. Facts reveal that around 350 million Indians are skilled in the English language as India ranks second-largest English speaking nation across the globe. Hence, English speaking fluency is one of the prime reasons why India has become the hottest global outsourcing destination. Easy communication and round-the-clock availability provide an edge against the competitors like China, Mexico, and the Philippines including many others.
The outsourcing market is growing at an unbelievable rate especially during this uncertain time as it helps organizations to realign their strategies and resources to focus on core business activities. Advanced technologies such as cloud computing, mobile device web access, data center virtualization, AI development; low code development, Integration, and delivery including many others are significantly realigning the possibilities and simplifying the complexities of outsourcing IT services. Post Covid-19, businesses are increasingly shifting their focus to implement new technologies for optimizing their processes resulting in huge cost savings and resources. Currently, around 37% of the companies outsource a single process amongst which 24% of them are outsourcing to enhance their efficiency.
