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Positive Effects of Outsourcing to India

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Outsourcing to India helps companies reinvent their business strategies and achieve scalability, operational efficiency and business growth.

Business process outsourcing originated as a cost saving activity, assuring timely delivery of quality projects. Today, innovation, process automation and value addition promise to be front runners.

Acknowledging it as a “strategic assist”, experts opine that companies can use this to run businesses without hiring any employee.

Outsourcing to India has played a major role in making small and medium sized companies get in Fortune 500 analog. In the last decade, the USA, UK, Europe, Australia and the Middle-East successfully moved a significant portion of their business processes to outsourcing service providers in India.

Outsourcing to India Statistics & Trends

Why do companies outsource to India?

Why Companies Outsourced to India?

Repetitive and time consuming, though essential, tasks such as data entry, data processing etc. are often considered for offshoring.

Inadequacy of highly skilled & technology-driven in-house teams, results in companies outsourcing such tasks to India.

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What are the benefits of outsourcing to India?

1. Cost

Cost is one of the prime drivers for most organizations outsourcing their business operations. Consumer products giant Unilever Europe witnessed an annual savings of €700 million by outsourcing some operational activities. The dollar rupee exchange rates, inexpensive hiring of skilled labor in India and low infrastructural investments as against setting up operations in their native country, makes India the most desired destination for outsourcing business processes.

Find out more about cost benefits of outsourcing! Download Infographic

2. Skilled manpower

Skilled manpower

Digitally skilled IT-BPM manpower in India is set to rise to 150 million in 2020, from 50 million in 2010. India has an edge over other countries in the global labor market owing to its young, skilled & English-speaking workforce.

With the highest number of technical personnel from double the number of university graduates if compared to the USA and various developed countries – India leads.

Mark McRae’s bold outsourcing decision resulted in his company hiring 1,300 skilled resources for his 30 companies to generate $280 million in online and offline sales. The Indian talent diaspora commands not such higher technical competencies but also a high zeal to contribute towards organizational goals.

3. Flexibility

Skilled manpower

Businesses with seasonal cycles, like e-commerce, have to upscale and downscale in order to respond to changing priorities and increasing competition. Acer, the personal computer maker leveraged capability sourcing to become world’s second-largest PC manufacturer.

They succeeded in maintaining a strikingly lean and flexible operation with a workforce of 6,800 employees – less than a tenth the size of its largest competitor. Outsourced support teams allow for scaling the team size up and down as needed, without over-hiring or having to let people go when not required. Most of the outsourcing deals have conditions for change in requirement or termination of contract ensuring flexibility.

4. Ramp up

Ramp up

Business strategy and operational needs many a time demand exponential scaling up of production in a short time. Outsourcing has proven to be a successful and implementable plan to ramp up resources and infrastructural/technology set up in a very short time.

In an operation ramp up, Hitech up-scaled its order processing team from 15 to 100 analysts/CSRs within a year. The new hires ranged from graphic design and production artists to engineering trainees. Outsourcing works out to be an advisable option where you can rely on your outsourcing provider to hire the numbers and skills you need in the time frame specified by you.

In a similar ramp up, a Netherlands based company wanted to scale up its offshore capabilities in a short time span. Hitech was able to scale up the 15-member BIM modeling team to 70 plus BIM modelers in a time span of just six months. The inclusions comprised of fresh engineering graduate trainees to senior and experienced BIM modelers.

5. Process management & improvement

India’s IT spending is projected to total $89.2 billion in 2019, an increase of 6.7 percent from estimated spending of $83.6 billion in 2018,Gartner, Inc.

Business processes of an enterprise make it what it is. If the processes involved are in continuous improvement, the business is bound to excel. Outsourcing to India is one of the most reliable options to do so. Based on a lot of scrutiny, security and compliance checks, they focus on bringing in change in the business process using their domain expertise and extensive experience of working with their clients from across the globe. Indian business process management companies follow strict protocols which define their process work flow.

6. Time-zone benefits

Time-zone benefits

Outsourcing back office processes to India is like making your office work 24/7. The time-zone differences starting at -5:30 (GMT) through to -12:30 (PDT) enables companies to accomplish a lot more in a normal work day, than getting the work done locally.

7. Engagement models / pricing models

Ramp up

Used synonymously, it is all about your relationship with the outsourcing partner you select during the duration of the project. Starting with how payments will be dealt with, pricing models depend on attributes like type of project, budget predictability, scope flexibility, time to market etc. Fixed price, time and materials, or dedicated team engagement models; companies outsourcing their projects to India opt for the one which suits their business requirements best – to reap optimum benefits.

8. Digitization & automation

Digitization & automation

Digital transformation backed by automation & robotic process automation (RPA) is the next milestone the Indian outsourcing industry is looking out to lay. By combining business process management tools and software with cognitive processing – efforts are being made to successfully eliminate human labor.

A leading commercial bank in Singapore partnered with an Indian outsourcing company to digitize and automate their loan approval process. It not only enabled them with single-click approval for faster processing but the bank also witnessed over 50% improvement in speed of operational processes, 50% reduction in turnaround time, and 26% reduction in human errors.

In spite of higher set up costs – a lot of Indian outsourcing service providers are willingly adopting RPA to lower costs for their clients – which eventually will help them in a longer run. Automation has slowly, but steadily, started changing the competitiveness of the global outsourcing market.

9. Outsource R&D and Innovation to India

Digitization & automation

India accounts for 25% of innovation centers in Asia and 80% of new innovations are exploring artificial intelligence and big data analytics. Innovation within an organization is often slow and ineffective, as corporate hierarchy of approvals create inertia, stifles creativity, and drills down the fear of failure in employees. In-house management of R&D and innovation is usually done with short-term goals in mind and is also influenced by internal politics.

P&G opted for a different approach and outsourced some of its R&D activities. It boosted the innovation productivity by 60% and generated more than $10 billion in revenue from over 400 new products. In contrast, outsourcing companies are not loaded with these problems. Outsourcing innovation and R&D to India, as a separate and strategic investment in the long-term vision of the business, has helped organizations, globally.

Conclusion

Initial teething and some operational issues raised initial concerns that outsourcing was not going to be a walk in the park. Outsourcing had the tendency to get messy with mounting volumes of work, cultural and language barriers, and the pressure to keep costs down. The situation has significantly changed and the Indian outsourcing industry has addressed more or less all the challenges. Concerns are predicted well in advance, and with help of appropriate planning; issues and risks are resolved effectively and in time.

Disruptive concepts like blockchain, big data and AI have crept into the market. The pressure on companies to get more innovative, embrace new technologies, and survive unforeseen market dynamics is compelling them to look out for expert and experienced alternatives to meet their business needs. Outsourcing to India has immense opportunities for forward-thinking organizations to enhance innovation and improve market competitiveness. Irrespective of the size of the business, whether a company is looking to grow their business or is looking out for innovative solutions to streamline their operations – outsourcing companies in India have a sure shot solution for all of them.

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About Author

Chirag Shivalker

heads the digital content for HabileData, a global data management solutions outsourcing company, rated as one of the top BPO companies in India. Chirag's focus has been on enterprise wide data digitization, data governance, data quality, and BI capabilities.

6 min read
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