INTRODUCTION Now, we are in a borderless world, in which boththought and works are borderless. The concept of global village has become a reality due to the telecommunication revolution. Business activities havecrossed the boundaries of geographical distances. Every country, both developed and developing is taking full advantage of this borderless market to exploit itsresources to the best use and grow economically strong. As a result outsourcing is now hot in India also.
WHAT IS OUTSOURCING?Outsourcing is subcontracting a process, to a 3rd Party company being specialized in it.
OUTSOURCING - TYPES There are three types of Outsourcing.Offshore Outsourcing: that is contracted outside a companys own country Onshore Outsourcing : that is contracted with the companys own country.Nearshore Outsourcing : that is contracted to a companys neighboring country
WHY DO COMPANIES OUTSOURCE? 36%36% 4% 13% 10% 1% Reduce Operating Cost Focus on Core Business Improve Quality Increase Speed to Market Foster Innovation Conserve Capital
OUTSOURCING- INDIA India holds a 70% market share in the world wide Outsourcing market. More than half of fortune 500 companies outsourced to India. 2010: $150 billion Contribute 1% to the GDP growth.
INDIA- OUTSOURCING CHRONOLOGY AIRLINES Early 1980s-several European airlines started using Delhi as a base for back office operations, British Airways being one among them. The BA captive was finally spun off as aseparate organization called WNS Global Services in 2002 AMEX Late 1980s- , American Express consolidated its JAPAC (Japan and Asia Pacific) back office operations into New Delhi and NCR region. Thiscentre was headed by Raman Roy, and has been a source of several leading names in the Indian
GENERAL ELECTRIC1990s – General Electric started back officeoperations in India (@ Gurgaon) -GECIS (GE Capital International Services) .Hired Raman Roy and several of his managementfrom American Express . In 2004 GECIS was spun off as a separate legalentity by GE, called Genpact.
THIRD PARTY BPOS 1999 - Daksh eServices in Gurgaon- email support service. 2000- Efunds started in Mumbai and Gurgaon 2000 - Raman Roy quits GECIS to set upSpectra mind in Gurgaon. Customer Asset and 24/7 Customer setup shop in Bangalore.
ENTRY OF IT MAJORS 2001 – Dell, HSBC, standard chartered, HP, Lead the boom. 2002 – Wipro acquired Spectramind. 2002 -Infosys, HCL, Satyam, Patni 2004 – WNS becomes first Indian third party BPOfirm to hit $100 million revenues .IBM buys daksh for $130 million.
2005- onwards – Genpact,1-onesource, WNS, Convergys, HP… integrated IT and BPO services. Infosys, Wipro, IBM Accenture etc
WHY INDIA Large pool of highly qualified and English speaking force Low cost of labor Appropriate time zone difference with the west
WHY INDIA Educated employs. Large number of qualified workers Proven to be the best in the IT and computer software fields Produce around 100,000 engineers annually . Infrastructure: Telecom facility Power sector.
WHY INDIA Government:Realize potential for economic development Liberalization, Privatization and Globalization-1991 Favorable policies have turned India in to BPO/IT hub. e.g.- Investment promotion, Telecom policy, IT act.
OUTSOURCING COST PER HOUR.U.S. - $27Canada - $22Mexico- $18Carrabien- $16Philippines - $15India - $12 67-72% of costs to call centers operating in the US/UK is directly linked to man power costs. India only spends 33-40% of costs on man power. This includes training, benefits and other incentives for labor.
WHY INDIA? THE OTHER SIDE 1. Size of Indian Population 2. Improvement in Education 3. Dreaming of Foreign Jobs4. Respectability and Job Satisfaction
WE DEPEND ONU.S : 59%Europe, mainly U.K. : 27 %Asia-Pacific :9%Rest of the world :5%
OUTSOURCING TO INDIA BPO : Business Process Outsourcing CRM, Medical Transcription, Call CentersITES : Information Technology Enabled ServicesSoftware development, Data entry, Programming, Web development servicesKPO : Knowledge Process Outsourcing Financial Analysis, Legal Services
CURRENT TOP INDIAN RANKERS1) Infosys (2)2) Wipro (4)3) TCS (7)4) ACS (11)5) Genpact (20)6) Neusoft (26)7) HCL (32)8) iGate (35)9) Mind Tree (43)10)TechMahindra (44)source: International Association of Outsourcing Professionalshttp://trak.in/tags/business/2010/04/23/top-best-100-outsourcing-companies-2010/
IMPACT OF OUTSOURCING IN INDIAN ECONOMY Improved Indian economy primarily by employing a large Losing many number of people and traditional and cultural maintenance of infrastructure. benefits. The It is because of the outsourced outsourcing companies projects that people at large in India get opportunities to know and projects emphasize and work in MNCs. on the foreign cultural BPO companies also provide values ample opportunities for women and as such help them in their liberation and liberalization.
RISK IN DEPENDING ON OUTSOURCING Over dependence on outsiders job is risky because of theuncertain world of politics are controlling the economics. A war or a foreign policy decision may snatch the outsourcing job. For e.g.; as the US unemployment level is rising, theAmerican politicians are bringing out more proposals that appear to limit the use of offshoring. In Europeunemployment is not much better with especially Southern European countries suffering from rates up to 21,3% in Spain.
Emergence of competitors including Brazil, Philippines, Mexico, Canada, China and Ireland. The emerging cloud sourcing market will cause the destruction of the outsourcing market We cannot imagine what would happen to the millions of Indian youth engaging in the outsourcing job as thegovernment would not be able to provide an alternative.
CONCLUSIONTill date, outsourcing has done wonders for theIndian economy within a short period. But over dependence on outsourcing job is risky and may make our economy vulnerable to unexpected shocks. The policy makers should convert these resources for infrastructure and human capital development for the long lived economic growth and development of the nation.
THANK YOU FOR YOUR SUPPORT! By SHAMEER P H FUS 100603 DEPT OF FUTURES STUDIES