Outsourcing – A Passage to India

Implications: 1.The movement of backroom tasks to developing countries,most particularly India, is business and bottomline driven. 2.‘Reverse-outsourcing’ and ‘trans-outsourcing’ are emerging as latent foundations for a ‘One World’.

Analysis:  In June 2006 the Director-General of the International Labour Office, Juan Somavia wrote : “ In 2004, appoximately 565,000 women and men in developing countries were in jobs that delivered services to the developed country customers. This figure is likely to increase, perhaps doubling by 2008 but it would still represent a small fraction of total service sector employment in developed countries.”

Outsourcing is a trend being driven by global boom in trade and services, as companies worldwide seek cheaper ways of doing things. Outsourcing is also being driven by consumer choice, as consumers continually seek lower cost products and services. Increasingly, the economies are no longer operating locally or nationally, but globally. For any global player to remain competitive and grow its business and employ more people in frontline areas must look at sourcing globally some of their processes.

The overriding consideration in looking at offshoring opportunities is service enhancement. While lower costs will influence decisions, the overriding consideration will be the ability to offer customers an improved, consistent and high quality service.

Any outsourcing model should have, at least two basic components :

1.Pursuing further commercial utilities opportunities.

2.Accessing best-in-class global capabilities through further outsourcing, including offshoring, involving both IT and business process operations (BPO).

When outsourcing, some jobs will go offshore but that also provides an opportunity of getting to know the other economy and its culture and in the process may create opportunities for business where none existed in the first place. For example, India is a vast country with a huge population and a growing economy.This in itself has huge inherent opportunities. And outsourcing is one way of sourcing business opportunities. It would also give a leg-up to the tourism industry for both countries as well. This is one area that has gone unnoticed and unwritten. When figures are eventually worked out, outsourcing would emerge as a single important trigger and benefactor for tourism and airline industry. This should work out to be a mutually beneficial relationship.

Also, India has developed as a global leader in providing both IT and BPO services. With high-quality workforce many global players are making extensive use of the opportunities there.The boom in employment driven by outsourcing has boosted standard of living which in turn has increased the confidence levels of the Indian companies and they have started taking risks.

According to a study jointly done by Federation of Indian Chambers of Commerce and Industry and Ernst and Young, Indian companies invested over $2billion in the US in 2006-07 and completed 48 deals with firms there. And in the BPO space, Indian companies are now increasingly opening up units in the US providing opportunities of large-scale employment there, giving rise to a ‘reverse outsourcing’ trend.