IT Outsourcing India

The domestic BPO firms have strategized many ways to counter the annual rise in wage, which stands at 12-15 percent.

As a part of this strategy companies have started hiring fresh students with non-engineering backgrounds, companies are then moving their facilities out from metro cities to tier-II and III cities, to cope with increasing overheads including rising salaries.

Wages in Indian IT sector has grown tremendously over the year. The increase in salary has started taking its toll on the Outsourcing firm, where they have to shed 70-75 percent of their margin.

In fact, analysts and industry players believe that with these proposed strategies, the IT-BPO firms should be able to maintain their competitive edge in outsourcing for the next 10-12 years

Wages are not only on the rise in India, but also across other offshore locations like China, Philippines, and Romania. Despite higher wage inflation in low-cost nations, on the economic front this would still be considered lower due to the low-base wages in such countries.

Although there is an increase in wages at around 12-15 percent a year, but it is quite unlikely that the same rate will be sustainable in the coming years. Another factor attached to this hike, that will go in favor of India is that ‘if the hike continues, India still has the cost advantage for 15 years over US and the UK, since their wages increases at a rate of 4 percent.

Secondly, only the middle and high-level employees enjoy wage increase and not the entry level. So it is these entry-level candidates who form the major of the IT and BPO work and hence the impact on firms becomes less than the above said 15 percent.

Wage increase is not a new event; the industry has been experiencing this crisis for quite sometime now. So to counter this crisis companies can look to make larger use of fresher talent and hire alternative talent pool from non-engineering backgrounds, including talent from smaller cities. Its already happening.

Besides companies are also doing business by mixing end-to-end players and also using a lot of tools to improve productivity.

Though most industry players welcome this strategy, but on the other side experts have advised companies to be cautious and not get carried away. If the industry is not able to keep a check on the rising wage inflation through better productivity gains, the brunt will be significant.
Moving to smaller cities also reduces infrastructure cost. But some companies believe the other way for example “Infosys, feels that moving to smaller cities is not the answer to erase the effect of wage inflation since Infosys pays similar salaries to all employees across India,”

While on the other hand Wipro says: “To address wage inflation one has to start using better tools and technique with less amount of people and ensure we deliver quality work in shorter period of time.

Source : www.offshoringtimes.com

Tags: BPO Services | Freelance Projects | Multimedia Outsourcing | Bookkeeping Outsourcing | Business Consulting | CAD Outsourcing | Call Center Outsourcing | Data Entry Outsourcing | Internet Marketing Outsourcing | Software Development Outsourcing | Web Development Outsourcing | Translation Outsourcing | Handwriting Services | Legal Outsourcing | HR Outsourcing

A survey jointly undertaken by KPMG and the Economist Intelligence Unit validated the view of India as “a world apart in outsourcing“.

The report further elucidate that companies in India are more open to outsourcing all kinds of business functions in the region. While the rest of other outsourcing location in Asia cited “cost savings” as the core benefit of outsourcing, India believed that “allowing the company to focus on its core competencies” was the main criterion.

Dane Anderson, CEO of Springboard Research, adds an interesting fact to this divergent issue. According to him “As the country grows, Indian IT companies are finding it tough to cope with the developing scenario.

Anderson further strengthens his opinion by citing an example, about the latest outsourcing deal between IBM and a large wireless operator. He indicates that the latter was trying to grow with the market but to develop the IT operations to do that was a little hard, so in such cases if they plug in an outsourcing solution, they probably can benefit from that growth faster.

He also pointed that the success of the Indian IT industry in offshoring is for the fact that India has shown the power of outsourcing, and how well it manages to encompass those tasks throughout the country better than others.

There is also the attrition issue, like how to keep people and pay people. Its really tough in India now, and if they can even outsource that challenge to a provider, I think that makes it easier for them to cope.

The World Economic Forums Global Competitiveness Index for 2006, ranked India at 43rd among 125 countries, this is remarkably a high achievement with regards to capacity for innovation and sophistication of firm operations.

This is largely true, taking into fact that the quality of scientific research and the number of scientists and engineers, which are increasingly catering highly skilled professionals to the private sector.

The report also sounds on the contrary too, when it reads “Though India makes good use of quality technology, but the penetration levels of the latest technologies remain “quite low by international standards, and thats mainly because of Indias low levels per capita income and high prevalence of poverty

Source : www.offshoringtimes.com

Despite clocking amazing growth rates 30 to 40 per cent a year, the Business Process Outsourcing (BPO) sector has failed to attract solid investors. The mutual fund industry, which is otherwise quite desperate to leave its impression in virtually all sectors of the economy, is still keeping away from BPO.

This more than evident from the fact that Asset Management Companies (AMCs) like Franklin Templeton and Sundaram Mutual, in their latest New Fund Offers (NFOs), have covered everything from overseas companies to rural-centric enterprises. But AMCs have, apparently, always turned a Nelson’s eye to BPO.

“BPO is still a sunrise sector and, hence, there are certain apprehensions still attached to it. The risk in terms of its sustainable growth is doubted by many. The memory of the infamous IT bubble burst of 2000-01 is still fresh and this influences any talk of BPOs,” Sanjay Santhanam, Vice-President (Marketing & Sales) of Sundaram Mutual says.

Industry players also feel that BPO, as a sector, has still not matured enough in the country. “Companies dealing exclusively with outsourced work and who have been listed on the stock exchanges are also less in number. There are no quality stocks and most of these firms are subsidiaries of bigger companies dealing in an altogether different business,” pointed out Nisarg Trivedi of Franklin Templeton.

The AMCs are also not sure when it comes to visualising BPOs’ growth trajectory over the next 10 to 15 years. “Though the sector is growing rapidly, AMCs will wait and watch to see what stable dynamics BPO possess,” Nisarg added.

Nasscom, the software association, however doesn’t agree with most of these views.
“BPO now account for about 4 lakh employees with total exports of $5 billion. The industry is young, but not immature. Apprehensions about its future growth are also misplaced but, as we don’t deal with the stocks and exchange markets, I would not like to comment on the financial markets’ outlook toward BPOs,” Kiran Karnik, President of Nasscom, told.

Source : www.offshoringtimes.com

Unlike the past trend when companies used to give the whole offshore development work to a single service provider, now more and more companies are opting to outsource to multiple locations. The foremost advantage associated with it is the reduction of the risk factor.

The advantages of offshore outsourcing, no doubt, is manifold. The main advantage of this business process is the cost saving that attracts most of the companies to shift their business way towards it. Along with it many other benefits are also associated with it such as flexibility, faster services, hands on latest technology and trend of the market and many more. It has unique advantages attached with it than taking the help from the single service provider.

Till date it used to happen that clients used to do the whole business process with the single service provider. No doubt that there were lots of advantages with it, but along with that the probability of the risk was also higher. As all the functions were handled by the single service provider the chances of the risks were greater. Because clients are now increasingly choosing to outsource to multiple offshore destinations to reduce the possible risk of the business. No doubt those equal amounts of risks are involved in this business process and clients are always in the search of the way to reduce the possible risks of any business.

Offshore Outsourcing in IT Industry

Such type of Offshore Outsourcing generally takes place in the IT Industry as the possibility of the risk is very high in it. So the trend of sending the Offshore Software Development job work to the more than one destination is increasingly taking place in this industry. The best destinations for overseas IT services are India, China, Philippines and some other. This strategy facilitates multinational services companies a benefit because they already have the potentiality to present services from more than one location. Offshore Outsourcing in IT industry is facing some tough time at present as some cases of frauds are coming into the market. So the clients prefer to look for another alternative of taking the help of the overseas service providers in IT Outsourcing services.

By this way the companies also gain that competitive advantage and more flexibility for the services. They don’t have to rely on a single service provider as they already have the best suitable alternate with them in this type of the Offshore Outsourcing. They can also get the hand on the services and talents of the different companies and locations. It would provide them the best possible mixture of the services for their IT Outsourcing project. They also will be able to reduce the risk in the way that if one service provider fails in the market, only that lost of the cost they have to bear rather than the whole project. So it provides lots of facilities and options to the customers.

So this indicates that services from the multiple locations or service providers are helping the customers in their cause of the better and successful Offshore Outsourcing services.

Source : www.offshoringtimes.com

Tags: BPO Services | Freelance Projects | Multimedia Outsourcing | Bookkeeping Outsourcing | Business Consulting | CAD Outsourcing | Call Center Outsourcing | Data Entry Outsourcing | Internet Marketing Outsourcing | Software Development Outsourcing | Web Development Outsourcing | Translation Outsourcing | Handwriting Services | Legal Outsourcing | HR Outsourcing