INTRODUCTION TO OUTSOURCING

Outsourcing is contracting with another company or person to do a
particular function. Almost every organization outsources in some way. Typically, the
function being outsourced is considered non-core to the business. The outside firms
that are providing the outsourcing services are third-party providers, or as they are
more commonly called, service providers.
Although outsourcing has been around as long as work specialization has existed, in
recent history, companies began employing the outsourcing model to carry out narrow
functions, such as payroll, billing and data entry. Those processes could be done more
efficiently and therefore more cost-effectively, by other companies with specialized
tools and facilities and specially trained personnel. Currently, outsourcing takes many
forms. Organizations still hire service providers to handle distinct business processes,
such as benefits management. But some organizations outsource whole operations.
The most common forms are information technology outsourcing (ito) and business
process outsourcing (bpo).business process outsourcing encompasses call center
outsourcing, human resources outsourcing (hro), finance and accounting outsourcing,
and claims processing outsourcing. These outsourcing deals involve multi-year
contracts that can run into hundreds of millions of dollars. Frequently, the
people performing the work internally for the client firm are transferred and become
employees for the service provider.
The process of outsourcing generally encompasses four stages:
1) Strategic thinking, to develop the organization's philosophy about the role
of outsourcing in its activities;
2) Evaluation and selection, to decide on the appropriate outsourcing projects and
potential locations for the work to bed one and service providers to do it;
3) Contract development, to work out the legal, pricing and service level agreement
(sla) terms; and
4) outsourcing management or governance, to refine the ongoing working
relationship between the client and outsourcing service providers in all cases,
outsourcing success depends on three factors: executive-level support in the client
organization for the outsourcing mission; ample communication to affected
employees; and the client's ability to manage its service providers. The outsourcing
professionals in charge of the work on both the client and provider sides need a
combination of skills in such areas as negotiation, communication, project
management, the ability to understand the terms and conditions of the contracts and
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service level agreements (slas), and, above all, the willingness to be flexible as
business needs change.
The challenges of outsourcing become especially acute when the work is being done
in a different country (off shored), since that involves language, cultural and time
zone differences.

Decision-Making Process
Each outsourcing decision involves several steps and it is important to go through
them:
Step 1: Inventory of in-house resources.
Step 2: Assessment of in-house resources compared to services available in the
market place.
Step 3: Identification and evaluation of prospective bidders. This requires collection
of market intelligence, finding out other companies experiences with outsourcingetc.
Step 4: Competitive bidding procedure, including requestor proposals, evaluation of
bids according to selected criteria and clarification and comparisons of bids.
Step 5: Negotiations, including a letter of intent and usually a term sheet. The negotiations

have to be exhaustive.
Step 6: Signing the contract.
Step 7: Transition phase where the function from the clients’ facilities are transferred
to those of the vendor. This can be-and should be-a slow process and needs to be
handled with great precision.

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The Outsourcing History of India
The idea of outsourcing is not new. It started way back in the 1700s when
manufacturers started shifting the manufacture of goods to countries with cheaper
labor during the Industrial Revolution, following the precepts of Adam Smith in his
book 'The Wealth of Nations'. The history of outsourcing to India is an interesting
story. Even after over a decade of competitive global outsourcing, most of it still goes
to India. Reaching this pinnacle in outsourcing has been a long journey. As land, sea,
and later, air routes developed between the 15th and 21st centuries, more nations
started to outsource trade to other nations, eventually leading to outsourcing to India
and other nations.
Although the IT industry in India has existed since the early 1980s, it was the early
'90s which saw the emergence of outsourcing. First, some global airlines began
outsourcing their back office work to India—and then IT companies followed. Some
of the earliest players in the Indian outsourcing market were Texas Instruments,
American Express, Swissair, British Airways and GE, who started captive units in
India. Over the years, the industry has built robust processes to offer world class IT
software and technology-related services.
India offers a unique combination of attributes that have established it as the preferred
destination for IT-BPO. Advances in technology and communication have allowed
transnational companies to rapidly globalize at a very low cost. The cost of managing
workers in a distant location had fallen drastically, and the need to outsource became
stronger. Significantly, India also began efforts to open up its economy to the world.
Since the onset of globalization in the early 1990s, successive governments have
pursued programs of economic reform committed to liberalization and privatization.
The government started easing restrictions and liberalizing the economy, which has
helped the country see rapid economic growth.
Indian companies are enhancing their global service delivery capabilities through a
combination of greenfield initiatives, cross-border mergers and acquisitions,
partnerships and alliances with local players. Global software giants like Microsoft,
Oracle, SAP and many others have established captive development centers in India
over the years. Indian authorities have made efforts to further strengthen the
information security environment in the country, and special initiatives have been
taken to enhance the legal framework. Many companies in India have already aligned
their internal processes and practices to international standards such as ISO, CMM,
Six Sigma, etc. which have helped establish India as a credible outsourcing
destination.
The IT & BPO sector has been a key beneficiary in India's growth, with the cost of
international connectivity declining rapidly and quality of service improving
significantly. India's National Association of Software and Service Companies
(NASSCOM) have played a critical role in outsourcing by acting as a coordinating
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body for the industry. It conducts surveys and conferences which help in the
dissemination of knowledge and research in the outsourcing industry. As per
NASSCOM, "While India's low-cost talent pool has helped its businesses grow,
global incumbents have also recognized India's inherent advantage and have mastered
this capability by off-shoring more work out of India." India's competitive advantage
lies in its ability to provide huge cost savings and thus enabling productivity gains.

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THE 5 W’s OF OUTSOURCING:
Who should outsource?
Every company can reap big benefits through Outsourcing. Outsourcing can change
the way companies do business - through people, processes and technology. Whether
B2B or B2C, whether SMEs or large diversified companies or small home offices,
every company can leverage the power of outsourcing for business transformation.
Technology is the key to the competitive edge in the marketplace, and outsourcing
helps companies to leverage the latest and most sophisticated workflow technologies without capital investment - to optimize their business processes and get "more bang
for the buck." Outsourcing opens the door to a global talent pool of human resources
with the qualifications and skill sets to harness this technology effectively. The
internet along with workflow technology has streamlined the processing, transfer and
delivery of data so that large volumes of work can be quickly and efficiently
completed and delivered. Process maturity in the outsourcing arena has
revolutionized the way the world conducts business, and radically improved
business processes to make them faster, cheaper and better. Outsourcing has been
proven to reduce capital costs, increase efficiency, speed up time-to-market, reduce
labor costs, and enable core business focus. Outsourcing has actually helped
companies find newer and better ways to do things, thus adding value to their
products and services.
Why should a company Outsource?
Outsourcing gives:
 The competitive edge - through sophisticated technology and people
 Support to do tasks faster, better and cheaper
 Operational efficiencies without capital investment
 Leading-edge e-business infrastructural support and facilities
 Management
 Better performance
 Lower cost
 Security
 Process maturity
What should a company Outsource?
Outsourcing is a technology-driven, process-centric service business. Business
process outsourcing (BPO) refers to definable, repeatable business processes that
involve scale and volume. Research and Analysis outsourcings are the higher end of
the BPO spectrum, involving advanced analytical skills, domain knowledge, expertise
and judgment.
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When should a company Outsource?
When you want to focus on your core business and leave tasks that are not missioncritical to those expert in doing them
When you want it fast, you want it now, you want it cheaper and better - and you
don't have the time, money and people to do it all yourself
When you need specialized skills which are which aren't readily available in your
market - or cost the earth
When you want to gain the competitive edge
Where should a company outsource?
Firms are considering outsourcing more than ever before -- and their choices are
growing by the minute The company should outsource keeping in mind costs,
geographical locations, cheap labor, high quality service and price competitiveness.

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ADVANTAGES OF OUTSOURCING
Cost savings:
The lowering of the overall cost of the service to the business. This will involve
reducing the scope, defining quality levels, re-pricing, re-negotiation, cost restructuring.
Improve quality:
Achieve a step change in quality through contracting out the service with a new
Service Level Agreement.
Knowledge:
Access to intellectual property and wider experience and knowledge.
Contract:
Services will be provided to a legally binding contract with financial penalties and
legal redress.
Operational expertise:
Access to operational best practice that would be too difficult or time consuming to
develop in-house.
Staffing issues:
Access to a larger talent pool and a sustainable source of skills.
Time zone:
A sequential task can be done during normal day shift indifferent time zones - to
make it seamlessly available 24x7.Same/similar can be done on a longer term
between earth's hemispheres of summer/winter.
Increase in business:
Benefit of outsourcing is seeing a big increase in your profits, productivity, level of
quality, business value, business performance and much more.

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Concentrate more on your core business:
One of the benefits of outsourcing is that your organization will be free to concentrate
on your core business. By outsourcing all your non-core functions, your employees
can be put to better use and you will be able to see a huge growth in your core
business.
Make faster deliveries to customers:
Another benefit of outsourcing is that you can make quicker deliveries to customers.
Your outsourcing partner will be able to provide faster deliverables and you in turn
will be able to make quick deliveries to your customer. Faster deliveries can also help
you save on time.
Improved customer satisfaction:
With timely deliveries and high-quality services you can impress your customers.
Outsourcing can help you benefit from increased customer satisfaction and
your customers will remain loyal to your organization.

DISADVANTAGES OF OUTSOURCING
 Loss of control
 Quality problems
 Slow response time
 Can't understand foreign accents
 Slow resolution times
 Can't produce desired results
 Reduced sales
 Irritated customers
 Irritated employees, unions, people within community.

 Bad publicity

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TYPES OF OUTSOURCING
NEARSHORING
Nearshoring is one of the forms of outsourcing, where an organization outsourcers its
business processes to an outsourcing partner who provides cheaper services. The main
differentiator between offshore outsourcing and nearshore outsourcing is that the
outsourcing partner in near shore outsourcing is located geographically closer than the
outsourcing partner in offshore outsourcing. The term "Near shore" has been taken
from the fishing industry and now it is used widely in the world of outsourcing.
Advantages of Near shore Outsourcing





Closer proximity
Both the outsourcer and the vendor are in the same time zone
Better coordination and communication
Similar culture, mindset and language
Frequent visits to the outsourcing partner is possible
Greater efficiency

OFFSHORING
Offshoring simply means having the outsourced business functions done in another
country. Frequently, work is offshored in order to reduce labor
expenses. Other times, the reasons for offshoring are strategic - to enter new markets,
to tap talent currently unavailable domestically or to overcome regulations that
prevent specific activities domestically.

ONSHORING
Onshore outsourcing (also called domestic outsourcing) is the obtaining of services
from someone outside a company but within the same country. The process of
engaging another company within your own country for BPO or ITO services
Advantages of off shoring and on shoring:






Reduce and control operating costs.
Improve company focus on its core competencies and strategic imperatives.
Access to world-class capabilities and best of breed technology.
Re-allocate internal resources to higher-value purposes.
Address the issue of limited internal resources.
Accelerate re-engineering/transformation efforts.
Manage more effectively a difficult or problematic function.
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INFORMATION TECHNOLOGY
OUTSOURCING:
IT outsourcing occurs when an organization contracts a service provider to perform an
IT function instead of performing the function itself. The service provider could be a
third party or another division or subsidiary of a single corporate entity. Increasingly,
organizations are looking offshore for the means to minimize IT service costs and
related taxes. Many times, the outsourcing decision results in a transfer or sale of the
information processing assets and the people who performed the in-house function to
the service provider. Outsourcing is also a common option for start-up operations and
for organizations entering new business lines. Rather than devoting time, energy and
capital to the creation of IT processing services, organizations feel they can minimize
the start-up time required to enter new markets by contracting a third party to provide
those services immediately. IT outsourcing is an attractive option for many
organizations. IT outsourcing should be an integral part of an organization’s overall
business strategy, involving senior executives and key IT staff. The rationale for
pursuing outsourcing options involves the strategic, financial and
technological benefits to be gained.

KNOWLEDGE PROCESS OUTSOURCING:
Knowledge process can be defined as high added value processes chain where the
achievement of objectives is highly dependent on the skills, domain knowledge and
experience of the people carrying out the activity. And when this activity gets
outsourced a new business activity emerges, which is generally known as Knowledge
Process Outsourcing. Knowledge Processing Outsourcing (popularly known as a
KPO), calls for the application of specialized domain pertinent knowledge of a high
level. In fact, it is the evolution and maturity of the Indian BPO sector that has given
rise to yet another wave in the global outsourcing scenario: KPO or Knowledge
Process Outsourcing. The success achieved by many overseas companies in
outsourcing business process operations to India has encouraged many of the said
companies to start outsourcing their high-end knowledge work as well. Cost savings,
operational efficiencies, availability of and access to a highly skilled and talented
workforce and improved quality are all underlying expectations in outsourcing highend processes to India.

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BUSINESS PROCESS OUTSOURCING
Business process outsourcing (BPO) is the contracting of a specific business task,
such as payroll, to a third-party service provider. Usually, BPO is implemented as a
cost-saving measure for tasks that a company requires but does not depend upon to
maintain its position in the marketplace. BPO is the process of hiring another
company to handle business activities for you. Business process outsourcing is the
latest thing to affect all the industries in a positive way. (BPO) Business Process
Outsourcing has a common thing for every business. It helps the businesses take care
of certain tasks, which, if done in house, will prove to be nothing but a waste of time,
and both financial and human resources. Every business has various tasks to be taken
care of, both internal and external. These tasks also involve some, not worthy of the
time, money, and manpower, which could be spent on something better and more
productive. But still, these tasks have to be finished. This is where BPO business
process outsourcing comes in Handy. A Company can acquire business process
outsourcing service for many types of work. But, the services provided are broadly
divided into two groups. The first one is for the internal operations or tasks, and is
called the back office outsourcing. It tackles various operations within the
organization. For instance, a company may hire a business process outsourcing
company for the purpose of hiring or payroll. The other type of business process
outsourcing services deal with the external operations of a company. These could be
anything such as providing customer services, providing technical support to the
customers, or anything similar. Such services are called front office outsourcing.
Benefits derived from BPO can be summarized as follows:






Productivity Improvements
Access to expertise
Operational cost control
Cost savings
Improved accountability
Improved HR
Opportunity to focus on core business

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GROWTH OF BPO SECTOR IN INDIA
During the first half of 2007 was showing a moderate trend of growth which is
registered at 14%. Five years ago, the growth in this sector was quite low due to less
contracts but the situation is worse now. However, the growth of the BPO sector is
expected to improve. Indian BPO sector is facing competition from countries like
Philippines, Mexico, Malaysia, China, and Canada. India has an edge over other
countries as we consider the following:




Tech savvy professionals
Cost effectiveness
Superior competency
24 hour service
Economy of scale

.

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INDIA- THE MOST PREFERRED DESTINATION
At present, the most preferred destinations for outsourcing include Ireland, India,
Israel, Canada, Philippines and South Africa. India is leading the list of the most
favored outsourcing destinations across the world has a proven process maturity
model and has captured major share of the offshore market. The significant increase
in offshore outsourcing is in part, a result of the quality work that India has provided
for US companies and others. There are about 300 million English-speaking Indians,
so language isn't a barrier, and India’s labor costs, though rising, remain low. India
has become the world's outsourcing hub. India offers many competitive advantages
such as technological agility, quality, flexibility, cost control and faster time-tomarket.
India is a talent rich country and currently it exports software to more than 95
countries around the world. India is the best place to outsource to as you can avail the
best-of-breed services at a cost-effective price.
Philippines is India's closest competitor in terms of low average IT employee costs.
Here the education system is on par with the US system.
The total outsourcing revenues from Philippines is estimated to be under
$350million.Upcoming destinations include Ukraine, Russia, the Czech Republic,
Poland, China, Pakistan, Brazil, Argentina and Mexico.
Others
10%

Outsourcing Destination

Ireland
16%
India
China
19%

India
70%

Eastern Europe
Russia
Phillippine

Philllipines
20%

China
Russia
22% Eastern Europe
43%

Ireland
Others

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WHY OUTSOURCE TO INDIA
India's slowly opening economy coincided with the global boom in the technology
sector providing valuable source of cheap, educated labor for the world market.
In 2002, software exports and services made up 2% of India's GDP. Some analysts
expected the sector to grow above 7% of GDP by 2008 and make up 30% of India's
foreign exchange inflows.
Taking advantage of the technology-savvy, English-speaking workforce, American
companies began outsourcing information technology (IT) and back office operations
to India.
More than 40% of the world's Fortune 500 companies outsourced a portion of their
services operations to India in2002.
Having the advantage of a nine-hour time difference, Indian operations made 24-hour
service possible.
If Software Engineering Institute's 'Capability Maturity Model Level 5' is the highest
quality certification in the software industry, then India's the place to be. With 65% of
the world's CMM Level5 companies and one of the world's largest pool of scientific
and technical talent, India is a logical choice for outsourcing.
Today, outsourcing has almost become the order of the day. So why are global
organizations choosing outsourcing? More and more global companies are choosing
to outsource today for a number of reasons, such as, cost-effective services, increased
efficiency, increased productivity, shared risks, reduced operating costs, increased
quality, better services and more time to focus on core competencies. These are just a
few of the reasons why organizations are outsourcing today. But why outsource to
India and why do companies outsource to India. India is the most ideal place to
outsource to, because India offers several advantages. India has been a pioneer in
providing outsourcing solutions and has been providing a range of outsourcing
services to countries across the globe.
Today, India can be called as the world’s outsourcing hub. Outsourcing to India can
help your organization benefit from cost-effective services, high-quality services,
reduced operating costs, greater flexibility and faster-time-to-market amongst others.
These are just a few reasons why companies outsource to India. Another reason why
outsourcing to India makes good business sense is because India has high-end
technology and best-of-breed infrastructure. India has now become the world’s most
preferred outsourcing location. India is also the global hub for software enabled
services and software development. Outsourcing to India can give your organization a

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competitive edge. The following are a list of reasons why companies outsource to
India.
1. Cost-effective services
The numerous reasons why global organizations outsource to India is because India
offers cost-effective services. Outsourcing to India can help you save more than half
of your operating costs! India has a large, educated, trained and technically skilled
manpower and this number only keeps growing every year. Unlike the west, where
technical talent is rare, India has a large pool of highly-skilled professionals. Having a
large technically skilled manpower has enabled India to provide cost-effective
services without compromising on quality. Outsourcing to India, can help you save on
your operating costs, while increasing your productivity, quality and efficiency.
2. High-quality services
India uses the latest in software, technology and infrastructure to provide global
customers with high-quality outsourcing solutions. India has proved that it is
technically superior when compared to othercountries that provide outsourcing
solutions. So, when you outsource your work to India, you can beassured that the best
technology and software would be used for your services. India has the largest
English-speaking audience after the U.S. India also has a highly educated manpower
that is talented, educated, experienced, technically-skilled and computer literate.
Outsource to India and be assured of high-quality services.
3. Time Zone Advantages
The time zone advantages between India and countries in the U.S and U.K has proved
to be another important factor why companies outsource to India. Organizations who
wish to provide their customer with 24x7x365 days customer support or helpdesk
services can outsource to India.
4. India’s stable government
India has celebrated more than 60 years of democracy and has one of the world’s
most stable governments. Building up the IT sector has been a top priority for the
Indian government. India has ministry of information technology that quickly
approves the implementation of IT projects and streamlines regulatory processes. The
Indian government has even released a bill termed as the ―IT act 2000‖ India has been
rated to have the most excellent investment potential in the coming years. The Indian
government has given complete support to the IT and ITES industry in India. With
ample support from the government, Indians have been able to build high-tech IT
parks which has the best in technology and infrastructure. The Indian government has
even permitted 100% foreign equity .India’s fast growing economy has been yet
another reason why companies are outsourcing to India.

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5. The Indian Advantage
Cost-effective services are one of the primary advantages that India offers, but it is
not the only advantage of outsourcing to India. Outsourcing to India can give you
access to professional and skilled outsourcing solutions within a fast turnaround time.
By outsourcing to India, your organization can concentrate on core business activities
and save on time, effort, manpower and infrastructure. More than 20 Indian software
companies have achieved the prestigious SEI-CMM level. India also has the highest
number of ISO-9000 software organizations. Outsource to India and give your
organization competitive advantage.
6. Global organizations’ most preferred choice
India has been the most preferred choice among global organization when it comes to
outsourcing. In the U.S alone, more than 80% have ranked India as their first choice,
when outsourcing software and IT services. The U.S has also recognized India as an
outsourcing superpower. The number of organizations outsourcing services to India
has only been increasing over the years. This is reason enough to outsource to India.

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THE FUTURE OF OUTSOURCING –
OPPORTUNITIES AND CHALLENGES FOR
INDIA
OPPORTUNITIES:
Today more industries are where IT was in the 1990’s - knowledge based. Research
and Analysis Outsourcing may soon be the biggest revenue grosser in India as BPO
companies move up the value chain in their service offerings. This includes:
1. Research and Development –
 Product Innovation -Companies are going beyond basic research to invest in
innovation and new product development Companies that have invested in
R&D in India are Cisco Systems, Motorola, Hewlett-Packard, Google General
Motors Corp. and Boeing Co among others.
 Co-development- In pharmaceuticals, India has the opportunity of codevelopment and ownership of new patented drugs throughdrug research,
clinical trials and manufacturing. Indian pharma major Ranbaxy has an
agreement with MNC GlaxoSmithKline to commercialize compounds they
develop together.
2. Legal Outsourcing –
India’s large pool of qualified English-speaking lawyers with experience in the
British legal system can offer paralegal support, legal support and patent services.
A few Indian companies affiliated with American law firms are now able capture
a tiny piece of the American market. They are now doing legal research at very
high rates by Indian standards but yet 50% below typical American rates.
3. Engineering Outsourcing –
India can provide high-quality engineering services in the fields of:
 Mechanical & Electronic engineering- analysis and design embedded software
 Plant Design, Process Engineering
 Plant Automation Services
 Enterprise Asset Management and OEM solutions
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4. Remote Infrastructure Management Services India can offer management services for IT infrastructure, applications operations, IT
security and maintenance. This sector presents great potential through large-value
multi-year contracts
5. Accounting Services -We are in the initial stage where Payroll processing services
and some accounting is being done for large American companies. This trend will
continue and soon a full range of accounting and tax services will be provided by
Indian companies.
6. Outsourcing opportunities for India exist in other fields like Financial Research,
content development, medical writing: animation, film, publishing, web services;
Human Resource outsourcing: recruitment, training, Education, Nanotechnology and
many others.
CHALLENGES FOR INDIA:
1. Rising competition  In the next ten years, China will replace India in its number 1 position in the
global ITES-BPO industry.
 Rising costs and low efficiency in many cities like Bangalore will make
software outsourcing less attractive in future. The giants may show a drop in
earnings.
 India’s terrible Infrastructure will continue to be a drag on the potential of
India giving other countries the competitive advantage.
 Other competing countries providing low-cost outsourcing options will exert a
downward push on costs – East Europe, Latin America, South Africa
2. Infrastructure  India’s ability to develop infrastructure is far outpaced by neighboring China
 Metro cities are getting saturated and costs are rising -- Tier II towns need to
develop infrastructure but India’s track record does not bode well for fast
development.
3. Human resources and training  The demand-supply gap in India for knowledge workers is being felt now in
Bangalore but may peak India wide in 2015
 The education system needs transformation to produce people with skill sets
that match industry needs.

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SWOT ANALYSIS
Strength 


Highly skilled, English-speaking workforce
Abundant & Cheaper manpower
Lower attrition rates than in the West
Round-the-clock advantage for Western companies due to the huge time
difference
 Lower response time with efficient and effective service

Weaknesses  Recent months have seen a rise in the level of attrition rates among
outsourcing
 The cost of telecom and network infrastructure is much higher
 Local infrastructure
 Political influence

Opportunities  To work closely with associations like Nasscom to portray India as the most
favoured IT destination in the world
 India can be branded as a quality outsourcing destination
 $69 billion ITES business and
 $97.5 billion IT (consulting, software solutions) market in near future

Threats  The anti-outsourcing legislation in the US states
 Workers in British Telecom have protested against outsourcing of Work to
Indian companies
 Other IT destinations such as China, Philippines, Vietnam andSouth Africa
could have an edge on the cost factor

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P.E.S.T ANALYSIS
Political Factors
 Counter-trade Agreement to Benefit Indian Companies like Wipro, Tata
Consultancy Services (TCS), Infosys Technologies Ltd etc
 Increase in Globalization, Liberalization and Privatization
 Liberalizing the rules and trade barriers levied on Foreign Software
Companies

Economical Factors
 The fourth largest economy in the world (measured in terms of purchasing
power parity)
 Has the second largest group of software developers after the U.S
 .Lists 6,600 companies on the Bombay Stock Exchange;
 The IT industry as a whole represents 2.87% of GDP
Social Factors
 Comparative advantage of English speaking & technically educated graduates
 Indian engineers settled abroad are returning back to India to add to the skill
set available in India
 Sends more students to the U.S. colleges than any other country in the world.
In 2007, over 84,000 Indian students enrolled in the U.S.

Technological Factors
 Moving up the Outsourcing Value-chain
 100 of the Fortune 500 have R & D facilities in India
 One of six countries that launches its own satellites- One of only three
countries that makes its own super computers

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SOCIO-CULTURAL ENVIRONMENT
Though many qualified Indians continue to migrate, there are enough qualified people
in India, which leads to a high level of entrepreneurship and availability of managerial
talent. Industry and service sectors show high growth rates, benefiting the outsourcing
industry, serving both domestic and international demand. High value-adding,
intellectual work starts to come to India. Indian outsourcing companies dominate the
global competitive scenario as access to capital becomes easier. Many qualified
Indians continue to migrate, but there's enough quality manpower in India, leading to
a high level of entrepreneurship, as well as the availability of managerial talent for the
outsourcing industry. If we talk about Indian society, then definitely one can notice
and observe the change brought by the outsourcing services and institutions. Being
world’s second most populated country, human resources are a boon by itself, in India
.Outsourcing can be both beneficial as well as harmful to the society. This industry,
which booms in metro cities, has caught hold of what can be called as the jugular
vein. Its role is somewhat restricted to the developed cities only and can be least
found in the villages and remote areas of India. Outsourcing industry has improved
Indian economy primarily by employing large number of people and building and
maintenance of infrastructure. It is because of the outsourced projects that people at
large in India get opportunities to know and work in multinational corporations.BPO
companies also provide ample opportunities for women and as such help them in their
liberation and liberalization. There is a good percentage of women workforce
employed in the outsourcing companies in the cities. The role of women has
consistently changed and they can better take care of their finance and their career.
Meanwhile we are also losing on several cultural and traditional benefits. The
outsourcing companies and projects emphasize on the foreign cultural values, the
place from which the original project has been outsourced. The holidays, the work
culture, day-to-day dealings and more tend to lay greater importance on the social
norms that are not part of our system, our community. We are slowly adapting to the
change, accepting the dominant culture and yielding to such values, which neither we
have assigned, nor have they come from our own social domain. Outsourcing based
on call centers comes with a package of cultural and value systems associated with
western culture.
As Indian BPO serve mainly customers from western countries, their employees are
provided with opportunities and training in understanding the culture, accent, and
customs existing in the outsourcing receiving countries.

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OUTSOURCING - A BOON OR A BANE FOR
INDIA
Indian companies offer a wide variety of outsourced services. Outsourcing to India
has been a satisfactory and profitable experience for most companies around the
world.
Indian outsourcing vendors have continuously adapted to internal and external
challenges and the credit for this goes to Indian outsourcing companies and the
successive enabling governments
Great number of jobs are created
Only left over work comes to Indian software industry, which is labour intensive and
does not require brain or enhances skills of the personnel.
Indian society has received with the advent of outsourcing. Youth is moving away
from our culture and values..The gradual intellectual incapability and complacency is
creeping into the youth of the nation.
Indian society has received with the advent of outsourcing. Youth is moving away
from our culture and values..The gradual intellectual incapability and complacency is
creeping into the youth of the nation.

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CONCLUSION
 India’s emergence as a globally competitive supplier of software and services

has attracted worldwide attention. It is shown that the software and service
sector not only contributes significantly to GDP but also emerges as a major
source of employment generation in the country.
 India provides a range of services, including programming, conversions,
testing, debugging, installing and maintaining .This led to concerns that the
Indian software industry despite its apparent successes has returned to the
production pattern of the 1960s.
 Foreign tie-ups, foreign brand names and access to the latest imported
technology were once again the most important considerations and most socalled Indian computer companies actually just produce software for
integration with imported hardware
 India is exporting inexpensive lines of code and importing expensive foreign
software whilst trapped at the low end of the division of labour
 Competitive strength is based on low wages rather than productive dynamism
 A growing number of MNC’s followed the pioneers in setting up offshore
development centers in India in the 1990s
 In 1990 onsite sourcing constituted 90% of revenue in thes software sector.
This figure had fallen to 38.9% in 2002/03
 In contrast off shoring increased from 5% in 1990/91 to 57.9%2002/03
 32 Indian firms received the prestigious SEI-CMM certification by the late
1990s
 In 2001 about 40% of India’s software exports came from Bangalore.
 As the industry has expanded in terms of employment, revenue per employer
has been increasing, from $6198.5 in 1993/94 to$15,600 in 1998/99.
 Outsourcing for India is a boon because it has strengthened the Indian
economy, but there are some societal issues related with outsourcing which
can make it a bane.
 Outsourcing being o boon or a bane, the decision lies with how we look at it
and how it is channelized in our society.

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WEBLIOGRAPHY

http://en.wikipedia.org/wiki/Outsourcing
http://business.mapsofindia.com/india-company/outsourcing.html
http://www.therichest.com/business/top-10-outsourcing-companies-in-india/

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