Outsourcing – An Overview
In today’s hyper competitive world, businesses have understood that the best way to stay competitive is to outsource multi business activities to firms in offshore locations. This concept was initiated way back in 90’s, and has now become a trend as it take advantage of the power of information technology from far away locations to bring in economies of scale and cost competitive operations for executing and supporting a client's mission-critical
projects. As the economy across the world is in a declining stage, cost reduction has become one of the top agendas of most enterprises. India has now emerged as one of the hub for IT outsourcing as the country offers the most skilled workforce with least cost involved in it. For many firms in different countries, outsourcing to India has become a successful business model more than a mere cost cutting tool.
The Benefits
Cost Benefits: Outsourcing to India could bring many advantages to companies. One major benefit is accessibility of best quality services in a cost effective way. Services such as Call center/ Voice support, Consulting, Back office support; other business processes etc. can help you save 50-60%, when outsourced.
Concentrating on Core Business: Outsourcing helps large as well as small businesses to focus on their core business activities thus saving on time, infrastructure and even manpower thus avoiding unnecessary fixed investments. By outsourcing all your non-core functions, your employees can be put to better use. It also helps in saving maintenance as well as changing infrastructure cost thus improving revenues.
Operational Expertise: Outsourcing helps to access operational expertise which is too difficult or time consuming to develop in house. Outsourcing partner will be able to deliver much better services by understanding the requirements.
Benefits from Time Zone: Another benefit from outsourcing to India is time zone advantage. Compared to the time zone in Germany, India is +4:30 hours ahead. So critical works can be done much faster and brings businesses a competitive edge.
The Language Advantage: Most of the human resources in India are fluent in English. Apart from English, most other languages including German, French and Spanish is widely taught and spoken for business purposes.
Conclusion
Outsourcing makes great benefits to companies whether, small or big around the world. But the key point is to find the right partner for your outsourcing needs.
Showing posts with label India. Show all posts
Showing posts with label India. Show all posts
Sunday, March 21, 2010
Outsourcing and Recession
This is one of the most discussed topics across the industries; especially in Information Technology, Accounting services, Legal, Documentation, Logistics etc. There has been a debate going on, whether to outsource or insource projects. There are many advantages and disadvantages in doing both insourcing and outsourcing.
Insourcing is beneficial when a company wants to offer its works to other internal party yet not a part of the organization by keeping close contact and to maintain excellent working atmosphere. The negative aspect of insourcing is the availability of necessary resources at competitive prices. Here time and availability becomes major factors. Whereas, Outsourcing happens when a company (Outsourcer) hires the services and infrastructure of another company (Outsourcee) that would otherwise be done by in-house staffs
Outsourcing offers many advantages to businesses. Cost savings and flexibility are the main two quoted advantages of outsourcing. Most of the outsourcees work from countries having infrastructures and human resources at low cost compared to other countries. So this would definitely bring huge savings on project cost or cost related to the services. Flexibility as said before is another advantage of outsourcing. The outsourcer company can use their resources on a better way and more time could be allocated for strategizing, planning and marketing. It also helps to reduce overheads of outsourcer Company. Here the outsourcer Company will only be paying outsourcee Company for what they have actually produced. As outsourcing
can be advantageous most of the times, there are also few disadvantages of outsourcing which includes lack of direct managerial control, unfavorable contract lengths etc. But this could be managed if the outsourcee company has more focused project management teams who could deliver expected results on time. Most of the outsourcing companies are offering quality workforce to meet the precise demands of their clients and to develop a rapport in the industry.
Outsourcing during recession – Is it beneficial?
Recession is often said to be a period of an economy where there has been a negative growth in the Gross Domestic Product for more than two quarters. During this stage people and companies usually takes steps to reduce the outflow of money. Here the success factor depends on how to create more margins from low investments and spending.
There have been many researches and surveys conducted related to the spending of companies on products and services during recession. Most of the surveys and researches concluded that enhancing efficiency and improve productivity by spending less is the key. These studies prove that opting to outsource and improve the product and service margins would create more liquidity and feasibility in the company.
Most of the companies in countries like India have taken steps to provide quality services at low cost and bring more flexibility to Outsourcer Companies. Most of the Outsourcee companies have project management softwares and teams to analyze the cost of a project.
Thus, it is always sensible for businesses to outsource its services and beat the recession slumps.
Insourcing is beneficial when a company wants to offer its works to other internal party yet not a part of the organization by keeping close contact and to maintain excellent working atmosphere. The negative aspect of insourcing is the availability of necessary resources at competitive prices. Here time and availability becomes major factors. Whereas, Outsourcing happens when a company (Outsourcer) hires the services and infrastructure of another company (Outsourcee) that would otherwise be done by in-house staffs
Outsourcing offers many advantages to businesses. Cost savings and flexibility are the main two quoted advantages of outsourcing. Most of the outsourcees work from countries having infrastructures and human resources at low cost compared to other countries. So this would definitely bring huge savings on project cost or cost related to the services. Flexibility as said before is another advantage of outsourcing. The outsourcer company can use their resources on a better way and more time could be allocated for strategizing, planning and marketing. It also helps to reduce overheads of outsourcer Company. Here the outsourcer Company will only be paying outsourcee Company for what they have actually produced. As outsourcing
can be advantageous most of the times, there are also few disadvantages of outsourcing which includes lack of direct managerial control, unfavorable contract lengths etc. But this could be managed if the outsourcee company has more focused project management teams who could deliver expected results on time. Most of the outsourcing companies are offering quality workforce to meet the precise demands of their clients and to develop a rapport in the industry.
Outsourcing during recession – Is it beneficial?
Recession is often said to be a period of an economy where there has been a negative growth in the Gross Domestic Product for more than two quarters. During this stage people and companies usually takes steps to reduce the outflow of money. Here the success factor depends on how to create more margins from low investments and spending.
There have been many researches and surveys conducted related to the spending of companies on products and services during recession. Most of the surveys and researches concluded that enhancing efficiency and improve productivity by spending less is the key. These studies prove that opting to outsource and improve the product and service margins would create more liquidity and feasibility in the company.
Most of the companies in countries like India have taken steps to provide quality services at low cost and bring more flexibility to Outsourcer Companies. Most of the Outsourcee companies have project management softwares and teams to analyze the cost of a project.
Thus, it is always sensible for businesses to outsource its services and beat the recession slumps.
Tuesday, October 21, 2008
The Next 8 Years of Indian IT Industry
Forbes has some scary statistics on the salary hike rate in India. The 2007 rate is 15.1%, up from 14.4% the previous year. 2008 forecast: 15.2%. This is the fifth consecutive year of salary growth above 10%.
Good lord!
Is Death of Indian Outsourcing all that far out?
Assuming a 15% y-o-y salary hike rate, and a 2007 cost advantage of 1:3 in favor of India, and assuming that wages remain constant in the US, in 2015 the cost advantage disappears.
So what would need to happen in the next 8 years to find another sustainable competitive advantage for India, considering that India doesn’t do IT products?
It could be, that the IT skill-base in India is substantially larger than what exists in the West, in which case the outsourcing will continue purely on the basis of skills and not cost.
However, a large portion of the 4 Million people that the IT/ITES industry employs are not exactly skill-differentiated. That segment of the industry will need to go to a lower cost-structure.
In India, the bottleneck for going to that lower cost-structure will be finding English-speaking people. Cleaning up accents is one thing. Teaching people to converse fluently in a new language is quite another. My sense is that the Call-Center work will move back to the US.
BPO, at least to some degree, would become automated via SaaS. Even Indian BPO shops would start streamlining by deploying SaaS solutions to make their own processes more efficient. Trimming of fat will definitely be in order.
One final point - Politics.
If the Democrats get the White House for these next 8 years in question, chances are, they would try to offer incentives to US companies to keep jobs in the US.
Couple that with instability in Pakistan post-Musharraf, as that country learns to operate with a new system called Democracy, for lack of a better word. It will hang over India like a dark cloud.
So, overall, are we to expect the Indian IT/ITES industry growth momentum to subside in 2015, or even before?
Adopted From: Indian IT Industry: The Next 8 Years, www.sramanamitra.com
Good lord!
Is Death of Indian Outsourcing all that far out?
Assuming a 15% y-o-y salary hike rate, and a 2007 cost advantage of 1:3 in favor of India, and assuming that wages remain constant in the US, in 2015 the cost advantage disappears.
So what would need to happen in the next 8 years to find another sustainable competitive advantage for India, considering that India doesn’t do IT products?
It could be, that the IT skill-base in India is substantially larger than what exists in the West, in which case the outsourcing will continue purely on the basis of skills and not cost.
However, a large portion of the 4 Million people that the IT/ITES industry employs are not exactly skill-differentiated. That segment of the industry will need to go to a lower cost-structure.
In India, the bottleneck for going to that lower cost-structure will be finding English-speaking people. Cleaning up accents is one thing. Teaching people to converse fluently in a new language is quite another. My sense is that the Call-Center work will move back to the US.
BPO, at least to some degree, would become automated via SaaS. Even Indian BPO shops would start streamlining by deploying SaaS solutions to make their own processes more efficient. Trimming of fat will definitely be in order.
One final point - Politics.
If the Democrats get the White House for these next 8 years in question, chances are, they would try to offer incentives to US companies to keep jobs in the US.
Couple that with instability in Pakistan post-Musharraf, as that country learns to operate with a new system called Democracy, for lack of a better word. It will hang over India like a dark cloud.
So, overall, are we to expect the Indian IT/ITES industry growth momentum to subside in 2015, or even before?
Adopted From: Indian IT Industry: The Next 8 Years, www.sramanamitra.com
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