Outsourcing in India: The hub of IT Support, Talent & Innovation

The outsourcing industry in India is one of the most sought after by the world’s biggest brands. By contracting out a few processes to a third party, a business can focus its efforts and resources on core activities. India outsource market solves capacity issues, enhances the quality of service, and helps in efficiently managing the business environment. Outsourcing to India was initially a step undertaken solely to reduce costs. Now, the competitive landscape, agility and innovation, and availability of skilled talent are important factors that compel businesses to choose outsourcing in India over other countries.

According to Gartner, the worldwide IT services market grew around 1.7% in U.S. dollars in 2020 as the demand across the IT services industry continued to shift toward digital, powered by cloud and automation-based solutions. The market growth has been stable despite the pandemic. The steady growth of the IT industry is clear in the upcoming years as businesses need innovation, agility, and operational flexibility.

India Shines: Global Outsourcing Statistics

The 2021 Global Services Location Index (GSLI) overall country rankings indicate that, at a regional level, Asia continues to dominate the index. India, China, Malaysia, and Indonesia hold the first four spots in the global services value chain again this year. Additionally, Vietnam, Philippines, and Thailand also continue to maintain their foothold in the top 10 rankings.

The rankings make it evidently clear that while most locations have seen changes in their rankings due to intense competition, India outsource continues to shine since the measuring of attractiveness for locations started.

IT Outsourcing to India: Bringing It to the Hub

India is an undisputed leader in the outsourcing industry. It offers a wide range of English-speaking skilled labor that no other low-cost countries can match. According to A.T. Kearney,  India hosts more than 1,140 global in-house captive centers, which allow almost half of the top 500 global companies to work in India.

There have been continuous developments within the sector. One such development is the NASSCOM’S online platform for upskilling more than 2 million tech workers and educating 2 million others who are willing to learn to do this work.  There are more than 1000 delivery centers established by Indian IT and ITeS companies in approximately 80 different countries.

About 75 percent of global digital talent resides in the country. 

4 Most Commonly Outsourced Services in India

The Indian workforce can ensure that quality work can get done at affordable rates. Below is the list of outsourcing services India can act as an ideal destination for.

1. Information Technology (IT Services)

Technology and digital platforms are a growing necessity in the business world, and IT outsourcing can significantly help enterprises gain a competitive advantage. IT services require expertise in specialized fields and proper tools and technology. Therefore, there is an inherent need to train employees and set up the infrastructure required for the same. This process can be expensive and also time-consuming.

The important IT support services required by any industry are:

• Technical Support
• Software Development
• Website and Mobile App Development

Many businesses prefer to India outsource destination as the Indian software industry has skilled software developers and already has the required infrastructure ready.

In addition to the software infrastructure, the Indian software industry has specialized knowledge and skilled software developers for the job. Also, since many of the Indian companies have been providing these services for decades, there is no need to worry about the quality of work.

2. Knowledge Process Outsourcing (KPO)

KPO involves the outsourcing of core, information-related business activities.

Some of the key tasks that require information processing are:

• Financial and Investment Research
• Research and Development
• Data Analysis and Interpretation

To perform these high-end tasks, there is a need to understand the nature of business and the underlying technology. It also requires the processing of large volumes of data. So, it involves a workforce that has advanced degrees and expertise in specialized areas. This requires a high amount of resources, effort, and time. In such a scenario, it makes more practical sense for organizations to outsource.

3. Back-office Support

Our world has become increasingly connected through the digital sphere, resulting in the exponential growth of social media platforms. This has led to the need for content moderation. Furthermore, companies need to ensure the safety and security of their customers on their digital platforms. Transaction management and complex data processing are also some of the most sought-after back-office processes that businesses look to outsource.

Some other back-office support services that can be outsourced are:

• Content Moderation
• Fraud Protection
• Application & Document Verification

4. Customer Support Services

Addressing customer needs and concerns is one of the most important tasks for businesses. If the queries are addressed on time, it goes a long way in fostering customer loyalty. But answering all the customer calls and replying to their emails is a tedious, time-consuming task.

Businesses outsource customer support to third-party call centers to attend to their customers’ needs in a timely and efficient manner. An ideal outsourcing partner leverages a dedicated staff and proper technology to provide uninterrupted support round the clock. Companies can direct their focus on their core business activities by enlisting an outsourcer for ing these services. Due to the availability across time zones, skilled labor, cost-effectiveness, and many more such advantages, companies choose India as the outsourcing center.

Advantages and Disadvantages of Outsourcing in India

Outsourcing in India remains a very attractive proposition for many international businesses. Due to its commercial attractiveness, wide talent pools, and the appropriate business environment, India as an offshore outsourcing destination glows amongst others.

What are the Advantages of Outsourcing in India?

A Deloitte study revealed that over 59% of businesses are already outsourcing in India. Not just that, 22% of those that are not currently outsourcing in India are already planning to do the same in the coming times. Here are a few reasons why do companies outsource to India:

1. Infrastructure

With IT hubs in different cities, like Bangalore, Gurgaon, and Hyderabad, India has proved itself to be a leader when it comes to IT infrastructure. India also has well-developed telecom and cellular networks in many towns and cities which allows for a smooth flow of communication.

Infrastructure in India still has room for development. However, when compared to other countries, India has the added advantage of offering better facilities and more optimized costs of operations on the ground.

2. Government Policies

IT is given high priority in India and the policies on taxation, telecom, etc. have been helpful in improving the infrastructure and communications systems. The Indian government has provided various benefits related to tax by enacting the Information Technology Act which also recognizes electronic contracts, supports the e-filing of documents, and bars cybercrime.

“India has moved 14 places to 63rd among 190 nations in the World Bank’s ease of doing business ranking on the back of multiple economic reforms by the Narendra Modi government.” – India Times.

The country also has a strong network of IT/ITeS promotion bodies and groups with special tax incentives for the Indian outsourcing and BPM industry. During the COVID-19 pandemic, government bodies have also made it easier for BPO employees to work from anywhere with the removal of the registration requirements and reduction of compliance burden. This will go a long way in enabling remote work for BPO employees, now and in the future.

3. Specialized Talent Pool

India has one of the fastest-growing talent pools for the IT and ITeS industries. India has a ready talent pool of employees, with the outsourcing service India marketplace directly employing over 4 million people along with indirect employment of over 10 million others.

With over 200,000 IT and engineering graduates joining the workforce each year, the talent in India can support businesses across various industries, including BFSI, healthcare, eCommerce, and technology, among others.

4. Quickest Time-to-market

Given the time zone differences, outsourcing companies in India provide the quickest time-to-market. For example, the 12-hour time difference in India and the USA leads to the faster completion of work, which further leads to increased productivity with greater efficiency.

5. Language Proficiency

According to a study in 2019, India is ranked 5th among Asian countries for proficiency in English. The country boasts of the second-largest English-speaking population in the world after the USA.

Over the years, outsourcing companies in India have been providing best-in-class services by adapting to internal and external capabilities. Due to the skills, communication, technology, deliverables, and many more advantages, India is perceived as a global destination for outsourcing IT services.

What are the Disadvantages?

People always discuss the advantages of outsourcing in India. But here we have also discussed what are the disadvantages if a company decided to outsource their work to India.

1. Work Pressure

The third-party outsourcing provider may also be involved with other brands and companies, which may involve shared resources. They might not be able to give as much time to a single project, which may result in setbacks in the output.

2. Cultural and Social Differences

Businesses need to adjust to the social and cultural practices of the outsourcing provider. The difference in time zones, regional culture, language, and dialect can potentially cause communication struggles.

3. Risk of Data Leak

There are risks to customers’ information and business project data. Once the data is outsourced, businesses have very little control over it. Therefore, safety and security are critical factors that you must take into consideration when selecting an outsourcing partner.

The Added Edge

The advantages of outsourcing to India vastly outweigh the disadvantages. What sets the Indian outsourcing industry apart is the ability to innovate and persevere even in tough times. The Indian digital and technology space is among the fastest-growing ones, compared to its other South East Asian counterparts. With Google announcing a $10 billion investment fund for advancing digitization in India, it is safe to say that this is the space to look out for; be it for outsourcing or any other business opportunity.