Facts on Outsourcing to India
Strongly competitive business environments in the 1990s led western companies to explore various methods to stabilize costs. At about the same time universities in South Asia graduated increasing numbers of trained individuals, particularly in the information technology sector. As a result a new corporate practice was born called outsourcing.
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Definition
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Outsourcing is a business process whereby a host company contractually arranges for an outside firm to provide certain non-core services. India has become a major international supplier.
Types
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India provides three basic outsourcing services---technology, business processes and engineering. Technology services include software development while engineering services may involve building design. The growing business process outsourcing sector features data processing and customer service call centers.
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Function
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Companies outsource functions to India to reduce costs. Wages are lower than in western countries but the work force is highly educated and trained to perform needed services.
Value
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The latest 2009 statistics indicate outsourcing earned India over $4 billion, with over $2 billion from North America. Other important customers include the United Kingdom and Europe.
Considerations
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The outsourcing market is dominated by approximately 20 firms, and due diligence should be exercised by carefully examining the host company's end customer needs relative to each outsourcing company's expertise.
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References
- Photo Credit call-center image by Yvonne Bogdanski from Fotolia.com
