Also, companies that outsource will gain access to capabilities and expertise of the countries they outsource to. The people of India grow up in a different society and have a different outlook on life. This would give them a different approach to problems in software, which can make certain problems seem simple. Furthermore, the competencies developed over in India can also be utilized by companies. Based on an economic model from Adam Smith,
Further, they point out that even more educated highly trained workers with higher-value jobs such as software engineers, accountants, radiologists, and journalists in the developed world The increased safety net costs of the unemployed may be absorbed by the government (taxpayers) in the high-cost country or by the company doing the offshoring. And when it comes to health and safety requirements it is based upon the company they work and job they do. All of the companies now are recommended the safety measures of their workers. The choice of offshoring destination is often made according to cultural concerns.
Specifically, companies are transferring these services overseas as in the case of call and help center services or companies are ordering manufacturing supplies from overseas at a much cheaper price than they could obtain them inside the U.S. Outsourcing is a term that is often used interchangeably with off shoring (Bhagwati, Panagariya, & Srinivasan, 2004).
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.
Ferreira, J., & Prokopets, L. (2009). Does offshoring still make sense? Supply Chain Management Review, 13(1), 20-n/a., pp 1-5, Retrieved from http://search.proquest.com/docview/221135949?accountid=12085
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
In 2004, Global Information Systems, Inc. began to put into motion the consideration of offshoring 3,000 jobs from here in the U.S to company locations in China, India and Brazil. These were highly compensated job positions. About half of GIS is separated into a division known as Global Services Divisions. A considerable portion of GSD’s business came from customers outsourcing their business process needs. GSD began to seek ways to cut costs and improve performance by “offshoring” certain activities in order to present the most attractive value proposition to potential customers.
“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
A final reason for the company to offshore part of their operations is access new markets. Since the company is not restricted to just the domestic market, offshoring gives the company global presence and the ability to access developing markets in Third World countries. By streamlining the company’s production processes and supply chains globally, companies can lower their prices increase demand for their products, thereby attracting new customers and entering new markets.
Tier1 cities have also seen an impact of the IT-BPO industry as the population in these cities have increased due to the growth of this industry. The IT-BPO industry is also looking at tier 2 and tier 3 cities as potential cities to expand into. These are all impacts of how IT outsourcing has effected India’s economy as well as the people living in this country.