Why Outsource to India
Large pool of highly educated employees
The universities of India enjoy an excellent reputation and produce year after year a large pool of highly educated graduates among which 75,000 IT graduates and over 2 million English speaking graduates. Compared to other low wage countries which at a first glance may seem equally interesting for outsourcing business processes, India has several advantages:
India, in contrast to other low cost countries like China, the Philippines and Russia, has five major advantages for outsourcing that make it an ideal destination for professionals and knowledge intensive services:
- Large pool of highly educated employees
- Significantly lower wages and workplace associated fixed cost
- Business friendly, stable macro conditions
- Well functioning infrastructure
- Significant outsourcing experience
Significantly lower wages and workplace associated fixed cost
While Indian salaries have continuously risen over the past couple years, they remain highly competitive with approximately US-$ 5,000 bis 12,000 annual salary for a graduate and US-$ 4,000 for administrative employees – compared to Europe and the US a cost saving of up to 90%. Salaries for graduates in China and the Philippines are similar however; the local outsourcing and off shoring expertise can not be compared to India.
Business friendly, stable macro conditions
The Indian Government is actively supporting the growing outsourcing industry – India is one of the few countries to have a dedicated state secretary in charge of growing the IT industry. The Government is supporting foreign majority ownerships and does not raise export taxes. Intellectual property rights are well-protected which is particularly important when considering outsourcing knowledge and know-how intensive business processes. The Chinese Government has not yet managed to support its growing economy in a similar way: Overregulation, trade barriers, ownership restrictions for foreign investors and lack of effective laws to protect intellectual property massively prevent the growth of the outsourcing sector.
Well functioning infrastructure
While telecom and IT infrastructure is largely inadequate outside of the Indian industrial centers and major cities, technology centers such as Bangalore, Delhi and Chennai are fully up to Western standards. The Indian Government is significantly investing into improving infrastructure and the continuous economic growth of above 8% will further accelerate this trend and lead to a significantly improved infrastructure in the near future.
Significant outsourcing expertise
Indian companies have delivered high quality outsourcing services for European and US clients for over 20 years. While the initial focus was on providing IT services, the portfolio of high quality services is continuously expanding. Today, the most complex and analytical services can be provided from India at superior quality such as research, product development and engineering. Compared to India, Chinese service providers are only capable of offering a narrow portfolio of services which is often limited to simple administrative tasks or simple software development. Even in the Philippines, the portfolio of outsourcing services provided is largely limited to call center services and accounting.
This analyses demonstrates that India is the undisputed outsourcing destination for US and European companies wishing to outsource their entire business processes while maintaining similar process quality and standards.
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- Number of highly qualified graduates – in the Pillipines, another growing outsourcing destination, less than 400,000 graduates are produced every year – among which only 15,000 IT graduates. Even China with its 50,000 graduates per year cannot compete with India. Ireland a well-known European outsourcing destination seems rather negligible with its 34,000 graduates per year, among which approx. 5,000 IT graduates.
- Qualification – Indian universities are globally identified for their excellent reputation. The Indian Institute of Technology“ is global leader in its domain. Many clients across the US and Europe already access leading Indian knowledge and capabilities. Particularly in engineering and computer sciences.
- English knowledge and capabilities – 2 million Indian graduates are fluent in English – European languages especially German, French and Spanish are also becoming increasingly popular. In China the number of English speaking graduates is negligible – furthermore, English speaking Chinese are typically more interested in exploring opportunities in the global labor market than staying in China and providing outsourced professional services.