Offshore outsourcing to India is one of the most popular management practices today. Though it is generally spurred by the cost reduction factor, this is just one of the reasons one should consider offshore outsourcing. Most parties who outsource are unaware that Indian Service Providers do not just offer cost effective solutions, but also value addition by improving productivity and quality.
Why consider offshore outsourcing to India? In today's competitive world, offshore outsourcing has become a boon for businessmen. And simply; for the majority of companies, offshore outsourcing has turned out to be a very attractive option due to its cost effectiveness. Moreover, outsourcing provides businessmen the freedom of dumping all of their non-core activities-, which is also an important aspect of their business- and gives them freedom to focus on their core activities. On the whole, it is a practice of handing over the work to an individual or group of individuals who can give cost-effective fair dealing to the development of your business.
Offshore outsourcing has been popular for several years. Countries like India are popular offshore outsourcing locations which offer cost effective solutions. There is a wealth of articles and write ups about the cost advantages of offshore outsourcing with a majority claiming anywhere between 40-50% savings.
It has one of the world’s largest pools of highly educated, English-speaking workers (250 million), many with scientific and technical skills. By 2010, India is expected to be the largest English-speaking country in the world. India has very low wages. Starting salaries for IT engineers in India range from $5,000-$10,000, low by US standards but very attractive in a country with a per capita annual income of $500.
Offshore Outsourcing is not just about cost. Outsourcing to India is an old concept, but its increasing popularity among leading organizations is what is making it coveted. Companies, through out the world have willingly accepted outsourcing, and are allocating there in-house operations to several other organizations situated in all parts of the world.
One should understand the need for offshore outsourcing better before making a decision. Cost is definitely one of the main reasons for offshore outsourcing to India, but one should realize that this cost advantage may not be seen immediately. Initial investment in infrastructure, training, and other such preliminaries may make one believe that the cost advantage promised is just the illusory pot of gold on the other side of the rainbow.
India Advantages India has the advantage of a very large number of English speaking populations, which is more than in any other non-English speaking country. Add to that the lower cost of manpower; it becomes very attractive to hire Indian software professionals. Once the boom started, India is producing software professionals by thousands. IT education starts right from Nursery and specialized institutes are available to provide diplomas/degrees in various fields of IT. There are many a success stories in the field of software development and outsourcing. Right from custom software development, India is now developing many software products as well.
There is lot of web application development in India, these days. There are new areas like SEO experts India. It is becoming so important that this may be the next big thing. Then there are specialized services like CAD services India and 3d designing. Web site design specially, high-end design using flash and 3d is becoming quite common. This has found applications in animation movies, special effects and even 3d gaming So, the aspect of saving money does exist, but one has to realize that initial investment may make the promise of cost reduction seem false.
There will be savings and along with these savings there is great value addition. Most who outsource only realize the quality and value addition after the offshore outsourcing relationship begins. This is not usually the primary goal when deciding to outsource, and the creativity and talent in India comes as a surprise to many.
Offshore Outsourcing to India is about quality and value addition at a reduced cost. The reason behind the popularity of offshore outsourcing is that it provides an option for getting highly productive manpower at a cheaper rate. For instance, an offshore outsourcing destination such as India is popular to U.S.-based businesses because of the cheap working rate. The other best thing is that it will leave businessmen free from additional responsibilities and give option to focus on the core of their business. On the other hand, the outsourcing firm can also focus on the specific work delegated to them as well as the purchase of necessary technology will now be handled by the outsourcing company, thus it is a cost-efficient business operation.
You are Reading this Article because you are considering offshore outsourcing and you heard INDIA has some outsourcing expertise. However, India combines the best quality with low cost.
Unclear Scope of Project Companies should specify the project scope and goals clearly to the offshore vendor. Without properly defining the goals and making sure the offshore vendor understands it, your offshore project will fail. Cross-Cultural Differences People from different cultures have different ways of viewing the same problem and often this is a cause for misunderstanding in offshore project. To address the cultural issues you must: ?Study and understand it during the offshore vendor evaluation process and make sure that it fits with their own corporate culture. ?Visit the offshore vendor's location and meet their team in their corporate setup to see how they work Communication Problems The time zone difference and problems of communication between Offshore service providers and client may result into slow responses from offshore providers. In fact, research studies show that 10% of offshore-outsourced projects are delayed because of communication problems. Cost Vs. Value Cost should not be the only motivation to offshore projects. Instead you should identify the value like increased customer satisfaction, improved operational efficiency you are getting from the offshore outsource projects. Offshore outsourcing Cost The Total Cost Management (TCM) allows you to focus on all aspects of offshore outsourcing cost like offshore vendor selection, onshore-offshore project management, process integration, dispute resolutions, travel, legal, etc. There are so many hidden cost you may have to incur in your outsource projects. Retention of Key Personnel Frequent turnover of key personnel in the offshore vendor's team leads to increase in time and effort required to transfer knowledge and train new employees. You should discuss with your offshore vendor and legally make it to be responsible for retention of key employees and have plans for smooth knowledge transfer in case the key employees leave the outsource firm by having legal outsource contract with them. Noncompliance with Government Regulations In any outsourcing initiative, government rules and laws of both countries need to be kept in mind. Specifically it is important for you to understand Statement on Auditing Standards (SAS-70), US Patriot Act and the Sarbanes-Oxley Act and identify the feasibility of outsourcing to offshore locations. Some types of work cannot be outsourced to offshore locations at all due to legal restrictions. Early Warnings Any time your work with outside vendors in a project, early problems and issues will occur, offshore vendors are no different. Without understanding and addressing to fix the issues, both you and the offshore vendor may find it difficult and discourage to work through them. You should make sure the issues are escalated properly both by your team and the team in offshore locations. Overemphasis on Process Several offshore vendors have CMM level 5 certifications and they may deliver your projects with highest quality with full documentation. Hiring offshore vendor without proper domain expertise, practical working knowledge, and in depth knowledge about industry you cannot expect success from your offshore projects. While offshore outsourcing is a powerful way to reduce cost, improve quality, increase efficiency, and refocus on core business, offshore outsourcing initiatives often fall short of management's expectations due to the reasons mentioned above. Early management planning can give you success in the offshore Outsourcing.
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