HRMT 427 (Week 2 Case)

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1 Week 2 Case Study - Case 3.2 India is Sending Jobs Abroad Maylyn Castro American Public University HRMT427 International Human Resource Management

1 Week 2 Case Study - Case 3.2 India is Sending Jobs Abroads Case Study Background Information: The case illustrates a persistent trend in the global economy—companies relocating their jobs and tasks to India. To adapt to rising wages, employees are expected to be proficient in languages beyond English. The future of offshore sourcing envisions a global redistribution of work. The primary incentive behind India's engagement in offshore sourcing is cost reduction. This strategy enables organizations to achieve significant savings; for instance, companies operating in India's developing areas can enhance profits by minimizing labor expenses. Consequently, Indian firms are establishing their presence in various developing countries to stay competitive, exemplified by Tata Consultancy Services' expansion to Mexico and Wipro's global outsourcing centers. From this case, how would you describe the new of offshore outsourcing? The new trend in offshore outsourcing, as observed in Case 3.2 "India Is Sending Jobs Abroad," can be described as a shift towards a more diversified and geographically dispersed approach. While India has been a traditional hub for outsourcing tasks and jobs due to its skilled workforce and English proficiency, several factors are reshaping this landscape. These factors include rising wages in India, the need for workers proficient in languages other than English, and increased competition from other countries seeking to replicate India's success as a back office. In response to these challenges, the future of offshore outsourcing is characterized by a more flexible and globalized approach. The prevailing notion is to be able to source work from any part of the world and perform it in any other part of the world. This implies a departure from

1 the exclusive reliance on a single outsourcing location and a move towards a more distributed network of outsourcing centers. To remain competitive and overcome challenges posed by emerging rivals with lower costs and geographic advantages, Indian companies are adopting strategies that involve hiring workers and establishing offices in various developing countries. This proactive approach allows them to expand their presence in different regions before their clients do so. This approach enables them to tap into diverse talent pools, lower costs, and maintain a competitive edge. The case provides examples of Indian companies like Tata Consultancy Service and Wipro expanding their outsourcing operations beyond India. These companies are opening offices in countries like Brazil, Chile, Uruguay, Mexico, Canada, China, Portugal, Romania, Saudi Arabia, and the United States. They are strategically positioning themselves to take advantage of local talent, cost efficiencies, and potential market opportunities. Overall, the new trend of offshore outsourcing highlighted in the case emphasizes the need for companies to be agile, adaptable, and globally oriented in their outsourcing strategies. The focus is on creating a network of outsourcing hubs around the world to capitalize on various advantages offered by different locations while remaining competitive in the dynamic global business landscape. What did Indian outsourcing companies have to change their strategy? Indian outsourcing companies faced a series of challenges and shifts in their approach. Initially, a sitcom called "Outsourced" shed light on the sensitive issue of jobs being moved to Indian call centers, triggering concerns and negative attitudes towards outsourcing. In the U.S., the outsourcing industry was under pressure due to public sentiment and political pressures,

1 further exacerbated by the economic recession. A Wall Street Journal/NBC poll indicated that 86% of respondents believed outsourcing was a key contributor to America's economic struggles. Economic pressures, coupled with changing sentiments, prompted Indian outsourcing firms to reconsider their strategies. The industry had relied heavily on the U.S. market, which accounted for the majority of their revenues. However, with recession-induced cost-cutting and political pressures limiting order flow from the U.S., Indian companies were forced to adapt. To thrive in the evolving landscape, experts advised that specialization was crucial. As the outsourcing landscape matured, the era of commoditized BPO services was ending. The focus shifted to higher-end services, particularly in the realm of Knowledge Process Outsourcing (KPO). Specialized expertise in areas like financial services, legal processes, and analytics became a key differentiator. This change necessitated adjustments in hiring, training, and corporate culture to cater to more complex tasks. Another strategic shift involved building stronger client relationships and moving away from the perception of being solely "offshore" service providers. The concept of onshoring gained prominence, emphasizing the value of local presence and understanding of client needs. Automation and technology integration were recommended to reduce labor dependency and enhance efficiency. Furthermore, diversification emerged as a vital strategy. While the U.S. market remained significant, companies were advised to explore opportunities in emerging economies like Brazil, China, Africa, and the Middle East. India's domestic market, which had been overlooked in favor of Western markets, also held untapped potential for growth. This diversification was deemed essential for sustained success and to avoid being left behind.

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