| Offshore outsourcing to India is one of the most | | | | comes as a surprise to many. |
| popular management practices today. Though it is | | | | "Certainly cost reduction, but it's not as simple as |
| generally spurred by the cost reduction factor, | | | | that! Cost reduction was only part of the reason |
| this is just one of the reasons one should consider | | | | that companies were considering offshore |
| offshore outsourcing. Most parties who outsource | | | | outsourcing, there were benefits to be had in |
| are unaware that Indian Service Providers do not | | | | time-to-market and quality, leading to an adage |
| just offer cost effective solutions, but also value | | | | that companies initially chose India to save costs |
| addition by improving productivity and quality. | | | | but stayed for the speed and quality!" (National |
| Why consider offshore outsourcing to India? | | | | Outsourcing Association (NOA), 1st Annual |
| Offshore outsourcing has been popular for several | | | | Offshore Outsourcing Conference - 23rd July |
| years. Countries like India are popular offshore | | | | 2003) |
| outsourcing locations which offer cost effective | | | | Offshore Outsourcing to India is about quality and |
| solutions. There is a wealth of articles and write | | | | value addition at a reduced cost. |
| ups about the cost advantages of offshore | | | | The shift in motivation is already apparent. The |
| outsourcing with a majority claiming anywhere | | | | fact that so many companies continue to |
| between 40-50% savings. | | | | outsource is proof of this. Along with the sheer |
| However, offshore outsourcing has come under | | | | volume of work that is pouring into the country |
| attack recently. There is an outcry against | | | | comes recognition of the talent and expertise |
| outsourcing by parties in the US and UK because | | | | possessed by Indian Service Providers. |
| of the loss of jobs to people in these countries. | | | | In an article featured in COMPUTERWORLD on |
| Many have pointed out actual costs and poor | | | | India's prowess in the outsourcing domain, several |
| quality of service as the hidden truths behind the | | | | analysts and outsourcing parties believed that cost |
| attractive packaging. | | | | was no longer the only reason why outsourcing to |
| Offshore Outsourcing is not just about cost. | | | | India is an attractive option. Companies in |
| One should understand the need for offshore | | | | countries such as Russia and China have begun |
| outsourcing better before making a decision. Cost | | | | offering better rates than Indian companies. |
| is definitely one of the main reasons for offshore | | | | "The difference lies in the scalability of major |
| outsourcing to India, but one should realize that | | | | Indian vendors, their strong focus on quality and |
| this cost advantage may not be seen | | | | their experience delivering a wide range of |
| immediately. Initial investment in infrastructure, | | | | services", says John Blanco, senior vice president |
| training, and other such preliminaries may make | | | | at Cablevision Systems Corp. in Bethpage, N.Y. |
| one believe that the cost advantage promised is | | | | The article continues to explain how major Indian |
| just the illusory pot of gold on the other side of | | | | software vendors have developed more of a |
| the rainbow. | | | | global services delivery capability than their |
| However, this cost advantage is seen over a | | | | counterparts in other countries. India's workforce |
| period of time in a outsourcing venture which | | | | also offers the largest pool of technical skills in the |
| involves a committed relationship and | | | | world, and the country's universities add 180,000 |
| understanding between both parties involved. A | | | | engineering graduates to its ranks annually. |
| recent article on IBM and outsourcing illustrates | | | | "The goal is to eventually use Indian vendors as |
| this. | | | | strategic IT partners, both to augment internal IT |
| "Outsourcing services companies frequently have | | | | development capabilities and to help Cablevision |
| to make substantial investments in IT equipment, | | | | plan, design and implement new projects. We're |
| facilities and personnel. Yet IBM, HP and others | | | | not looking for just the lowest dollar [cost]. We |
| prize these multiyear contracts because they can | | | | are looking for vendors that will help us mature |
| help bolster higher-margin sales of hardware and | | | | technically and from a process standpoint as well", |
| software by creating a long-term, interdependent | | | | says Blanco. ( "India Inc., Still Going Strong", by |
| relationship with customers". ("IBM cements | | | | Jaikumar Vijayan, September 15, |
| outsourcing dominance", CNET News.com, | | | | 2003,COMPUTERWORLD ) |
| October 02, 2003) | | | | Indian companies also realize that cost cannot |
| So the aspect of saving money does exist, but | | | | sustain the country's current dominant position in |
| one has to realize that initial investment may | | | | the offshore outsourcing industry. Nandan Nilekani, |
| make the promise of cost reduction seem false. | | | | CEO Infosys, points out that the way business is |
| There will be savings and along with these savings | | | | conducted is changing. The perfect formula two |
| there is great value addition. Most who outsource | | | | years ago is no longer the way to do business |
| only realize the quality and value addition after the | | | | today. Now the mindset is changing from a |
| offshore outsourcing relationship begins. This is not | | | | company that simply provides services to one |
| usually the primary goal when deciding to | | | | that provides solutions. |
| outsource, and the creativity and talent in India | | | | |