Outsourcing is defined as the delegation
of non-core operations or jobs from internal production to an external
entity that specializes in that operation. Outsourcing is a business
decision that is often made to focus on core competences.
Economic pressures have forced professional firms to think hard
about ways to increase profitability and be more competitive in
the market place. The changes in technology and globalization have
made it feasible for companies to succeed in today’s competitive
economy by leveraging outsourcing. Firms that take advantage of
outsourcing are well positioned to be competitive and innovative.
Outsourcing can have a powerful impact on your competitive advantage.
Businesses of all types and sizes are outsourcing most of they IT
tasks in order to benefit from better, faster, and cheaper execution
of those processes.
The primary benefits of properly executed outsourcing are easy
to understand: better, faster, and cheaper execution of business
processes with less risk and greater flexibility.
Outsourcing reduces or altogether eliminates the need for hiring
new employees and spending valuable resources in terms of equipments
and time for training them. When a company outsources most of its
IT requirements, the need for spending on new IT equipments also
reduces considerably. There is also the added benefit of not having
to learn or train employees for using new software programs.
Better process execution
Specialist organizations can often increase the quality and consistency
of how a task is executed because that is their core focus.
Faster process execution
For many tasks, outsourcing can provide a quicker turnaround time.
Additional capacity an outsourcer has in comparison with internal
staff can also affect turnaround times.
Cheaper process execution
By avoiding the fully loaded costs of in-house employees (hiring,
training, taxes, office space, equipment, benefits, etc.) these
resources can be applied to other functions that can grow your
business, or the savings can be passed on to customers to increase
your market share.
Risk reduction and flexibility
While outsourcing creates some business risks that must be analyzed
and mitigated, there are other risks that outsourcing can reduce
such as the risk associated with meeting increased or decreased
demand. Outsourcing can enable you to scale up or down more easily
and avoid the risks of unfulfilled demand or underutilized capacity.
Why Outsource to India?
India has an enormous supply of qualified, technical, literate
English speaking/fluent workforce and the salary rates compare very
favorably with other developed/developing nations around the world.
Hence, India is an obvious choice. As per the last statistics published
by NASSCOM, about 200+ of the Fortune 500 companies are outsourcing
their IT services to India.
India has already established itself as a Silicon Valley of the
east. Countries like Ireland & Singapore, the traditional outsourcing
hubs are finding it difficult to attract new customers because of
labor shortage and many other short falls. The potential for overall
savings could go as high as 50-60% for organizations that outsource
to India. Indian IT organizations are able to deliver superior quality
because of specialization and scale benefits
The cost of living in India is much lower than most of the western
countries. The salaries are generally in the range of 20% to 30%
of what they are in the western countries. Even if the capital expenditure
is considered at par, in India, the cost still is very low because
the operating costs are much lower. This is one of the main advantages
of having India as your outsourcing base.