Challenges due to low cost countries on India’s IT-BPO Industry
India is facing competition from other countries around the world in IT outsourcing. China, Ireland, The Philippines, Malaysia, Vietnam, Poland, and Egypt are just some of the countries that aggressively looking at IT outsourcing for growth. Over the years these countries have been developing their country to be able to provide IT outsourcing and lay a strong foundation to sustain this new idea. According to KPMG (2016), some of the investments these countries have done are built a huge market share by delivering a wide-range of services across the products line, insights across industries, investments in industry specific offerings and intellectual property tools/templates
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As per the NASSCOM report, “recently there were about 200 Indian companies offering BPO and related services looking for buyers”. According to the Asia Pacific Journal of Research, bills have been tabled in five states, New Jersey, Maryland, Connecticut, Washington and Missouri where there is a ban that you cannot transfer data processing contracts to developing nations.
Country
Strengths
Weaknesses
Poland
-High quality workforce
-Location to western & central Europe
-Top choice for back office data support
-High costs
Egypt
-Language skills
-quality of graduates
-Social & political environment
China
-Business friendly
-Have made fast strides to learn the English language
-Strong infrastructure
-Not the number one choice yet for voice work
-low English proficiency
Malaysia
-Strong infrastructure
-Favorable business weather
-Talent pool is small
-Less outsourcing experience
The Philippines
-Has the most developed outsourcing industry in terms of maturity, capability and range of service
-Weak infrastructure
According to the Asia Pacific Journal of Research, there are challenges and areas for improvement for India which are listed below.
1. Telecommunication is a big key to having part of a company outsource their business to India and for that reason India needs to have good infrastructure for providing good telecom facilities.
2. Workers in India
India has become a global conduit for business as they have liberalized their economic policies over the past 20 years. Companies are flocking to India because of many factors, including, less expensive labor costs, increasing growth rate, and an abundance of a highly skilled workforce. These factors in addition to other advantages have substantially increased the number of United States businesses looking to grow beyond the U. S borders into the county of India. Dunlop Software Consultant’s goal is to also expand its operations internationally and believes that India has the business environment to meet our goal of expansion globally.
India is one country which is developing rapidly at the moment along with China (Lal and Clement, 2005). The political, economic, social, cultural, technological and legal climate in India is extremely suitable for international entrepreneurs since business prospects in a country are heavily dependent on the above mentioned parameters. Since India is the second most heavily populated country in the world, British telecommunication company, Vodafone has enormous business opportunities in India. Mobile phone usage in India is increasing rapidly in recent times (Press Information Bureau: Government of India, 2010). A substantial portion of Indian
Davies P. (2004). What's This India Business?: Offshoring, Outsourcing, and the Global Services Revolution. London: Nicholas Brealey International.
There are many benefits of outsourcing that companies and countries seize to take advantage of. The biggest benefit is reduced costs of infrastructure and labor. According to the OneNeck IT Solutions, “The attraction to overseas outsourcing has traditionally been reduced costs. By moving support services to India or China, for
The IT Service industry has expanded rapidly. Many companies worldwide have made the decision to outsource this industry to offshore companies. Worldwide demand has increased growth to 40 to 50 percent on an annual compounded rate basis. Many developing nations like Latin America and Asia have made an attempt to obtain some of the IT offshoring business from countries like the United States because it is seen as not only a source for
Somehow other countries outsourcing may be slow for in India because of the uncertainty and lack of credibility that exists within the Indian market (Kalegaonkar A., Nov 4, 2008). This may be an obstacle for Clinigene. Moreover, with
It is accurate to say that increase in cost will occur. IT companies need to spend money overseas to India in order to build institutions for training and work facilities, even though the headquarters will remain in the U.S. What's more, promoting their company for jobs and services will cost the IT companies as well. However, this will happen only for the short-run. For instance, the construction is a temporary procedure as well as trying to start the business and have it be familiar to the country. The benefits are the result that will happen in the long run. Outsourcing white-collar jobs to India will help create more white-collar jobs in the States, but not overnight. Nonetheless, these new jobs will probably be meant to help keep track of the branches that remain overseas. In fact, studies show that outsourcing had already generated 90,000 net new U.S. jobs in
Outsourcing is the lifeblood of IT. The prevailing theory is that outsourcing saves companies money and enables them to engage a broader pool of IT skills and talent than they could in-house.
The outsourcing market in Asia Pacific grew substantially in 2007. Although the number of contracts signed in 2007 grew by just over four per cent, their total contract value increased 30 per cent year over year from $9.9 billion to $12.8 billion and annualized revenues showed a 13 per cent increase, nearly double that of global average . The outsourcing performance in the Asia Pacific region is becoming stronger.
Outsourcing to India will add to many benefits to help reducing cost. Out shoring some jobs across the world holds a lower wage unlike the United States where the minimum wage is around 8 dollars. The operating cost in India is much cheaper than it is here in America. All the resources that will be needed for Attorney on Call will be exceptionally cheaper as well as the training cost to train the new members for this business.
Office Supply Incorporated (OSI) is a company in crisis, with challenges in its cost structure and poor IT performance. Outsourcing to Technology Infrastructure Solutions (TIS) is an opportunity to both reduce costs and complexity for the firm, but first must consider whether outsourcing is a good strategic fit for OSI. Outsourcing is known as the practice of turning over responsibility of some or all of organizations information systems to a foreign firm in order to stay competitive. Outsourcing is not new to the business world, as it dominated the manufacturing sector the past couple of decades. There are various advantages and disadvantages. Advantages include lower costs, better quality, and downsizing to focus on the
“Today, Indian outsourcing is one of the best ways for CIOs to cut application development and maintenance costs, and deal effectively with the peaks and valleys of software demands.” (Yeo). Outsourcing to India is still focused primarily on highly technological aspects, but is not limited there. They are known for creative development in the pharmaceutical field, and have recently developed an unsurpassed medication for adult ADHD. Their superior IT assistance is not limited to companies, they offer many websites for individuals seeking help with programming. In mid 2007, U.S. outsourcing to India reached $4.9 billion. Although technologically advanced, they still lag in economic prosperity and therefore still don’t expect the type of compensation that Americans do. “They
India’s infrastructure as a whole ranks high amongst many countries around the world. According to the India Infra Guru, India was ranked 50 among 127 countries for their “network readiness.” The IT growth rate is 35%, only second behind China. India also ranks very high in roads, power, and aviation (India Infra
There are challenges that come with IT outsourcing in India and the biggest one being there are competitive revivals that exists due to low switching costs. The biggest competitor currently to India is China. China has been investing a lot of money into its country to grow this industry since it has seen the positive impacts on India. One of the ways China is attracting companies to move to China is that its government is offering significant tax incentives (KPMG, 2016). Some of the other countries that are competing with India are Ireland, The Philippines, Poland and Malaysia. There are improvements that India needs to focus on and two of these improvements are making sure they have good infrastructure; and keeping costs low for companies who are looking to move to China where it might be cheaper to have established their business processing. Though there are challenges and competitors for India, the future for India looks strong as well as room for growth. One of the areas that India is focusing on is domestic growth and making it a priority to increase the
Locations for outsourcing jobs is very important as companies need to decide what is going to be the cheapest option but also the most beneficial in terms of maintaining their remaining clients and customers, there tends to be quite high volume complaints when it comes to outsourcing jobs, problems can arise often due to language barriers, so choosing the best location