“Increase IT outsourcing increase unemployment:
Special reference to India”
Badal Kumar Saini
MBA 2nd SEM
(Department of Management studies)
Poornima Institute of Engineering & Technology
ISI-2 RIICO Institutional Area, Goner Road, Sitapura, Jaipur
INTRODUCTION TO INDUSTRY
Outsourcing refers to the techniques of overcoming of any problem of one company with
the help of other related company for example. Software, information, technology etc.
It involves the transfer of the management and/or day-to-day execution of an entire
business function to an external service provider. The client organization and the supplier
enter into a contractual agreement that defines the transferred services. Under the
agreement the supplier acquires the means of production in the form of a transfer of
people, assets and other resources from the client. The client agrees to procure the
services from the supplier for the term of the contract. Business segments typically
outsourced include information technology, human resources, facilities and real estate
management, and accounting. Many companies also outsource customer support and
call center functions like telemarketing, customer services, market research,
manufacturing and engineering.
Information technology outsourcing or ITO is a company‟s outsourcing of computer or
internet related work, such as programming, to other companies. It is used in
business process outsourcing or BPO‟s, Which is the outsourcing of the work that
does not require much of technical skills.
Information technology (IT) outsourcing is the outsourcing of information technology
and system operation to a suitable third party technology solution provider companies
outsource their IT development and management task to vendor achieve benefits
such as financial saving ,technical capabilities and market place ability.
Financial saving is a crucial driver for IT outsourcing as in the case of the business
process outsourcing (BPO) and customer service outsourcing (CSO).
IT outsourcing is a rapidly grooving industry .data monitor and Everest consulting
have estimated the global IT outsourcing market to be worth USD 163 billion in 2004
which are increase by USD 253.1 billion in 2008
Objective of the study
The primary objective of my study is to analyze the how IT outsourcing affect to
employment. The objective is to identify how the IT outsourcing dominate the
employment & increase the unemployment. How the companies in the market
adopted the new technology and how much what‟s kind of affect it have on
employment. We analyzing the various kind of IT outsourcing adopting by the
company for increase and promoting the good reputation in the market.
Scope of the study
The scope of the study will be specifically in the major companies including Small
skill industries and various organized and unorganized firm.
BPOs have a great scope in India. Around five year back, BPOs were just a means by
which companies could save costs only a few activities were outsourced. But now
BPOs are emerging as a management tools and focus is shifting from non-core process
to core process this is how BPOs gave rise to KPOs &Losing the near future BPOs
may be give rise to other sectors as well.
IT outsourcing provide jobs to employee because for this required Engineers, MB’s
Title of the study: - “Increase IT Outsourcing, Increase unemployment: special
Reference to India”
Duration of the project
Week: 1- Submission of blue print of the study.
Week: 2- Submission of abstract and finalization of the abstract.
Week: 3-Submission of the synopsis on the basis of literature review.
Week: 4- Finalization of synopsis.
Week: 5- Collection of secondary data.
Week: 6- Collection of secondary data to generate chapterization.
Week: 7- Finalization of chapterization.
Week: 8-SWOT Analysis of the study.
Week: 9-Finalization of the report.
Week: 10- submission of report on May 3-5-2011
Type of the research
Exploratory Research, The study based on quantitative research approach that
involves the generation of data in quantitative form, which can be subjected
to rigorous quantitative analysis in a formal.
The method of the study is quantitative, means collection of secondary data
and analyzing them.
These are the following source of secondary
Fact and finding
Global research findings
PricewaterhouseCoopers commissioned a study of outsourcing trends amongst 300 of
the largest global companies, including 26 large Canadian organizations. The
research, conducted by an independent market research organization, highlighted
some interesting issues and trends amongst the Canadian participants.
73% of the organizations have outsourced at least one activity or process. The main
reasons for outsourcing are: to enable a focus on core competencies; enhance
profitability and shareholder value; and avoid the investment in technology required to
The most commonly outsourced activities and those most Likely to be outsourced in the
near future are: benefits administration; payroll processing; logistics; real estate
management; and internal audit.
About half of the respondents believe outsourcing to be more important to their
organizations than was the case three years ago. 95% were somewhat or very
satisfied with their outsourcing to date, while 63% achieved at least the cost savings
expected from outsourcing.
Limitations of the Study
Here company doing outsourcing of information from India and out of India.
Thus, it is not easy to predict the how type of IT he outsource or to find how
many cost he incurred on them. When we come on IT outsourcing than we
don‟t predict that how many affect to the employment, Here in this report
you are going to get information about such type of IT outsourcing giants. In
such way the limitations of the study are scarcity of the reliable secondary
data, vast area of the study and limitation of time period.
The outsourcing trend has become a concerning, and debated topic in Indian politics and
economics. The main outsourcing purpose is cutting production cost by transferring
India jobs to lower paid foreign workers. Some views outsourcing as the way
company„s completeness, others see this as negative effect due to losing jobs. As a
student of College Management who major in Business and also minor in Economic, I
strongly believe that outsourcing is damaging India„s economy.
The India‟s growing unemployment rate is related to this outsourcing trend. One figure
from Forrester‟s Research shows that at least 40% of Fortune 1,000 companies are
sending India jobs overseas. The proponents of outsourcing argue that the
outsourced workers will be able to find job replacements through retraining. However,
according to a report by the McKinsey Global Institute, 31% of workers who lost their
jobs never found employment, (Rein gold). In addition, he negative effects of
outsourcing are obvious. As India lose their jobs to cheaper overseas labor, their
spending must reduce to minimum level of surviving. This, in turn, will reduce sales
and services in domestic national, thereby affect other people incomes. By
outsourcing, companies are able to reduce cost of products, but who could afford to
Rising Government Spending. When many people losing their jobs as a result of
outsourcing, there are fewer payroll tax receipts and fewer contributions to Social
Security and Medicare. Government revenues mainly depend on income and sale
tax. Reduction in this payments, add to outgoing payments for unemployment
benefits will result in increasing government spending. If those moneys were using for
educational, healthcare or other funding, it would have been better for India‟s
Disrupting the Education System. Besides effect of rising government spending,
outsourcing also is threatening education system.
The general methodology in IT-BPO should be total transparency in its HR
practices to ensure continuous of an individual goals with the organizational goals.
multi-dimensional approach needs to be adopted. More of concerted efforts only
would help to retain the talent. Everyone has to contribute to hold the employees
little longer period.
Career progression should be based on the performance and not on the number of
years of experience or seniority in the organization.
Companies can recruit the spouses of their employees, and non recruitable persons
like housewives and old age people
In India the IT-BPO is still nascent industry. It lacks licensing policies, labour law
restriction, common state laws for 24x 7 services and working in night shift, long
term financing options for infrastructure development and red tape in the
sanctioning of the policies. There is no single body or forum to represent the
views, problem and issues of the industry or the national level. NASSCOM takes
ITES under is purview but industry would be benefited by the body purely devoted
to IT-BPO. There should be common platform for all Indian-BPO to share best
practices and move the industry from commoditization.