Outsourcing as a phenomenon is not new and has been going on for years. But since 1990 the offshore outsourcing market has grown immensely bringing it into the spotlight. Not just old, but new companies too.
Outsourcing statistics show that the largest percentage of jobs being outsourced is in Information Technology, by around 28%. The next largest field is human resources taking 15% of the outsourcing market, followed closely by sales and marketing outsourcing with 14% and financial services outsourcing at 11%. The remaining 32% is made up of other different processes such as administrative outsourcing. Most of the outsourcing is done by multinational companies and the most popular destinations are India, China and the Philippines. Of course these figures slightly differ depending on the study and the point of view, but this division gives an idea of the outsourcing market.
Below you will find some outsourcing statistics:
• Meta Group estimates that offshore outsourcing will grow by more than 20% annually, increasing it from a $7 billion market in 2003 to a $25 billion market in 2015.
• According to Deloitte Consulting, 2 million jobs will move from the United States and Europe to cheaper destinations in the financial services business alone. The emigration of service jobs across all industries could be as high as 4 million. The consulting firm also forecasts that in the next five years 3/4 of major financial institutions and investment banks will allocate tasks to low labor cost countries and that India will be at the top of the list. Global financial institutions are predicted to invest $356 billion in India for outsourcing projects.
• Forrester Research estimates that 3.3 million U.S. jobs and $136 billion in wages could be moved to such countries as India, China, and Russia by 2015.
• Among the different offshore destinations, India has become the number one location for most companies. In its 2002 report titled, “IT Trends in India,” Gartner wrote that the market opportunity for Indian providers would grow to $25 billion by 2005. Gartner also states that, the global BPO market increased by 13% between 1999 and 2000, to $119 billion, and it will reach $234 billion in 2005.
All outsourcing statistics show that the offshore outsourcing trend is enormous and will just keep growing. India for example expects to create 2 million jobs in the next 10 years in offshore BPO.
The world is discovering the fact that India is a super power when it comes to developing IT solutions. Swept by the current of the latest trend “IT outsourcing to India”, we find many fortune 500 companies like Microsoft, Oracle, Citibank, Morgan Stanley, Wal-Mart, AT&T, General Electric, Reebok, General Motors, Sony, Boeing, Coca-cola, Pepsi, Swissair, United Airlines, Philips, IBM, Lucas and British Aerospace beneficiaries.
A closer look at the factors fanning the potentials of IT outsourcing in India.
1. India’s human resources
Being the world’s second highly populated country, human resources are a boon by itself. Just as the Gulf is renowned for its natural resource of crude oil, and South Africa for its diamonds, India is proud of the abundance and easy availability of its highly qualified and technically skilled English speaking computer professionals; who are key to success in the field of IT outsourcing to India.
2. Cost efficiency of IT outsourcing in India
Significant cost saving can be achieved by IT outsourcing to India, owing to the wide gap between the personal costs in India and that of the developed countries. Offshore outsourcing to India offers considerable economical benefits for those who are prepared to exploit the advantages of outsourcing.
3. Standard quality that firms doing IT outsourcing in India guarantee
The Indian companies involved in IT outsourcing in India provide high quality work, meeting international standards and complying with the ISO & SEI-CMM standards. Three out of every four SEI-CMM 5 companies worldwide is located in India. Thus India promises quality – IT outsourcing in India as it has the potential to furnish these services perfectly.
4. The reliable communication facilities
Excellent telecom, ISP, and cellular networks are available in all cities & towns in the country. India prides in the reliable satellite and submarine communication links that facilitate good band connectivity with the rest of the world. Thus companies engaged in IT outsourcing to India, can be in touch with the vendors without any connection hurdles. This plays a significant role in determining the success of offshore IT outsourcing to India.
5. Technologically advanced outsourcing firms in India
India’s technologies offer excellent software solutions. The applications include E-commerce, Business Process re-engineering, System Migration, Maintaining Legacy system, System integration etc. India prides in outsourcing facilities that are required to compete with others; which is yet another reason as to why the world prefers It outsourcing to India.
6. Galloping growth in Indian economy
The service sector in India contributes 51% of the GDP. Computer software export was prominent with a growth rate of 40%-50% per year during the 90s. India being the second largest software exporter in the world its large business houses and public sector units are growing steadfastly towards raising economic growth..
7. Professionals returning to India after lengthy overseas work experience
In the past 4-5 years, there is an increase in the trend of Non Resident Indians returning back to India, setting up their own business ventures after obtaining a wealth of experience overseas. These professionals know the western expectations and can deliver solutions on the ground in the Indian environment with their knowledge of the local business practices, language and networks.