WHY SOFTWARE OUTSOURCING TO INDIA?
Converging technologies of telecommunication, IT and media have redefined the way we do business. And global giants such as IBM, Microsoft, General Electric, British Aerospace & General Motors keep ahead of their rivals, thanks to the competitive advantage conferred on them by some of the best software companies in India. You, too, can benefit immensely from a successful outsourcing strategy.
The Scenario
Outsourcing to India is rapidly becoming a global practice as international corporations recognise its multiple benefits. The outsourcing budget of global leaders has increased significantly and the worldwide expenditure on outsourcing services is expected to reach $151 billion by 2004-2005. Most importantly, corporate giants in the USA, Europe, and Japan prefer India for cost-effective and high-quality software solutions. According to National Association for Software and Services Companies (NASSCOM), outsourcing industry is heading towards $1.2 trillion by 2006. And India, as one of the biggest outsourcing service providers, is likely to gain the most.
Outsourcing to India is providing effective business solutions to leading MNCs. Software Outsourcing helps MNCs to:
- Cut application development and maintenance costs.
- Deal effectively with the peaks and valleys of software demands.
- Focus on more strategic work.
How Software Outsourcing to India Helps
India is an ideal offshore destination for testing, web design, search engine optimization (SEO), web hosting, web application development due to various cutting-edge advantages. Let's take a closer look at the factors highlighting the potentials of IT outsourcing to India:
Quality Indian IT Firms
India offers vendor sophistication, as more than 200 companies are quality accredited and serve more than three hundred Fortune 500 companies. Indian outsourcing firms meet international standards and comply with the ISO & SEI-CMM (Capability Maturity Model) standards. Three out of every four SEI-CMM 5 companies worldwide are located in India.
Large Database of Quality Human Resources
The abundance of highly qualified and technically skilled English-speaking computer professionals is the key to success when it comes to IT outsourcing to India. The country churns out 75,000 IT graduates and two million English-speaking graduates every year. According to a recent study, around 17 million professionals will be eligible to join the IT industry by 2008.
Cost Effective IT Outsourcing Solutions & Services
Substantial cost-saving can be achieved by IT outsourcing to India, as compensation packages are much lower. Studies and analyses suggest that outsourcing business to India saves as much as 70%.
Reliable, State-of-the-art Infrastructure
The comprehensive IT infrastructure makes India the most viable outsourcing option for the corporate houses worldwide. Excellent telecom, ISP and cellular networks are available across the country. In addition, India has reliable satellite and submarine communication links that facilitate good band connectivity with the rest of the world.
Robust Growth Potentials
According to McKinsey & Co., by 2008, the country is projected to achieve $70-80 billion in software exports and ITES earnings. The Indian software and ITES sectors are poised to achieve long-term export potentials and their contribution to the GDP will also go up from just about 2% to 10% by 2008.
The growth is being fuelled by the following factors:
- A large mass of potential "blockbuster" customers are all set to take off.
- Familiarity and experience with offshoring is dramatically increasing the breadth of service lines.
- As offshoring becomes more mainstream, global majors experience increasing pressure to move a significant portion of their work to India.
Favourable Government Policies
IT is regarded as one of the top five priority industries in India. It is a part of the national agenda and policies are framed so as to obtain maximum benefit out of IT outsourcing to India.
Major initiatives taken by the Govt. of India:
- All policies and decisions are custom made, keeping in mind the need to achieve maximum benefit for the outsourcing industry.
- The liberalisation and deregulation initiatives support growth and integration with the global economy.
- Reduced licensing requirements to make foreign technology accessible.
- Fewer restrictions on investments.
- Growth-oriented EXIM policy that attempts to remove some of the existing procedural deterrents and anomalies that have hampered software exports.
- De-regulating the software and the ITES market even further and creating a world-class business environment, where the industry can gain momentum.
- Tax incentives to boost the IT sector.
