Advantage India

Offshore Destinations: Advantage India

“India is world's topmost offshore destination”

Offshore Location Attractiveness Index – 2004 by A T Kearney, American Business Consultancy

Developed and developing countries throughout Europe and Asia offer some IT outsourcing services. The first and by far biggest offshore marketplace is India, whose English-speaking technocrats have built the IT services business into a $4 billion industry. India will continue to be ahead of the pack in terms of offshore destinations due to following reasons.

  • Cost: Low labour cost in India can provide typical savings of 30%-60% of US/UK operating costs once migration and communication overheads are taken into account.

  • Quality: With solid IT and management education, decade of experience in outsourcing and adherence to international quality management program; Indian companies offer unparalleled quality to their customers.

  • Time: Appropriate time-zone difference with the west also makes India an attractive outsourcing location. A 24x7 development cycle technically halves the time in which the company usually brings products to market.

  • People: India has a large skilled labour force. Every year the educational system graduates 2 million proficient English speakers with strong technical and qualitative skills.

  • Technical Expertise: The brand equity built by the software services sector is a compelling reason for choosing India as the offshore destination. India generates more university graduates than the United States- some 40% with degrees in science and engineering.

  • Experience: India offers the deepest experience in business process outsourcing among other destinations as it has been an offshore outsourcing destination for over a decade. Stephen Roach, chief global economist and managing director, Morgan Stanley, believes that "India's IT enabled sector is not just about global labour cost arbitrage, but Indian companies have now become strategic partners with world-class multinationals."

  • Infrastructure: India now offers a robust communication infrastructure with heavy investment from private and public sector towards the digitisation and installation of high speed communication technology.

  • Business Cultural Affinity: Indian companies are mostly in the private sector and share the same motives and values as US and European companies. As companies from western countries have gained more confidence in the reliability of Indian IT, the trend towards outsourcing has increased. Several companies have set up their own IT centres in India. This is true for large corporations like Ford, General Motors, General Electric; IT MNCs like Microsoft, Oracle, HP, Dell, Google; giant global professional services consultancies like IBM, Ernst & Young and Accenture; global financial companies like JP Morgan Chase, American Express, Citigroup, Standard Chartered as well as for many mid-size companies.

  • Economic Gain: Outsourcing to India benefits the US economy as well as Indian companies. A recent study by the McKinsey Global Institute has shown that for every dollar that is spent on outsourcing a business process to India, the US economy gains at least $ 1.12, and this saving benefits the US consumer. It is also estimated by the same McKinsey study that the US has lost two million jobs in the last 20 years due to global trade, while it has added 35 million net new jobs in just 10 years. Outsourcing to countries like India can also benefit the UK economy by increasing jobs in the long term and improving the country's competitive advantage as British Prime Minister Tony Blair said “If American and European companies did not outsource to India, they would be less competitive and could well lose out to competition”. The picture below shows that India scores over other destination for outsourcing in terms of cost and other non-cost consideration.

Advantage India

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