Niyamath Parveez

There has been a suggestion that the Indian outsourcing fad is coming to an end. With so many other nations realizing the financial and economic benefits that have came to India through outsourcing, it has been harder for India to compete effectively. Much like India was able to undercut and out-compete the larger nations with regards to labor costs, smaller developing nations have managed to do to India. This is very much in line with cyclical nature of economics and would not have come as a complete surprise to industry experts. The successful firms will find a way to keep on top or be attractive to other firms and the smaller and weaker firms will fall away.

However, the stories about the death of Indian outsourcing would appear to be greatly exaggerated. There have been enough positive news stories in recent weeks to indicate that India will remain at the forefront of outsourcing services around the world. As stated, the firms who are able to provide quality services to other companies will remain in high demand. This is due to the fact that many firms are realizing that low labor cost is not the only thing worth pursuing, there are other aspects which are desirable too.

One of the ways that India is managing to stay at the top of the outsourcing tree is because there are still firms around the world looking to move into outsourcing. For companies who are unsure of what to do or where to go, it makes sense to look for the market leader. By and large, choosing the companies widely recognized as being market experts will provide customers with a level of confidence that they are making the right decision. This is of great benefit to the new customer and a great reward for being recognized as a market leader.

Some of the companies who have moved into outsourcing recently and therefore very late in the game compared to some companies include Renault, Volkswagen and Harley Davidson. These are all huge brands which further add to their need to associate with large firms who can handle high pressurized orders. They are all interested in the engineering industries and this should ensure that this industry in India will reap the benefits for years to come. There will always be a shakedown to lower levels, which means that emerging companies will be able to find a niche but when it comes to top level companies, India remains the top choice.

In fact, this continued reliance on Indian engineering outsourcing is said to achieve a sum in the region of $55bn by the year 2020. This is just over 10 years away, so it is not so far away in the future that it cannot be imagined. The past ten years have moved rapidly and the next ten years are likely to be the same. The top outsourcing firms will be the ones who have the income to invest in new technology and this should help them stay at the very top end of the market.

There is no doubt that size is important in so many things in life, being able to take advantage of economies of scale is just one of the benefits that will arise from a company becoming bigger as the bulk buying power makes it easier to spend less per individual purchase. These are exactly the types of things which encourage a firm to develop in size and to reap the benefits of being bigger. There are obviously other issues that will arise from becoming bigger, having a more bloated staffing system may be one of them but this is a problem that many firms are happy to work with. This can be partly justified by the fact that a larger firm is more likely to have a more positive reputation amongst other firms which could lead to more work coming their way. The possibility of obtaining work due to size is something that is extremely prevalent in the age of outsourcing.

When economists look back at the start of this century, the word outsourcing will be written large across the history books as a great method of expanding the global market. A firm being able to bring work to their country which was previously not acceptable has provided a massive boom to developing nations. However, when dealing with firms from a nation that is yet to develop a reputation or lacks credentials in their staffing levels will find it hard to obtain new work. This is where developing an internal market and showing your company to be one of major size and responsibility will work wonders for showcasing your reputation. A firm will look at the potential suppliers who are looking to take over their work and the levels of staffing will play a huge factor. Being able to deal with any emergency or eventuality is going to be a positive for any firm. The promise of a low price may capture the attention of a potential partner but a failure to guarantee a workload will turn many consumers off.

Another great way that a large firm can benefit in the world of outsourcing is that their size is likely to make firms desperate to work with them. Although the bulk buying power of a large firm may drive down the individual cost of each unit produced or hour worked, there will be the likelihood that the wider benefits of huge orders will offset the lower price. This is something for the accountants and managers to consider but it is likely that the guarantee of the high volume of work is going to greatly impress and attract any company. There are so many benefits that can be attributed to both sides in the outsourcing relationship when one of the partners is large in size and scale that it makes sense for all parties to consider and get involved with. No matter the size of the firms, outsourcing will provide a benefit but there are definitely occasions where bigger is best.

India is the place to be for outsourcing but this hasn’t just come about through luck, there are a lot of good reasons why India is rightly proclaimed the outsourcing capital of the world. Of course, as many smaller nations look to take advantage of the benefits that has propelled India to this position, there is a greater degree of analysis about what India has to offer and can it be replicated in other places throughout the world. There is no doubt that if there is some sort of secret formula than can be used, there will be a queue of developing nations eager to copy the Indian formula but it may not be as straightforward as that.

One of the key reasons why India has surged in front for outsourcing is the fact that a great number of their population are very keen to learn and find it easy to take on new instructions and challenges. It is wrong to say that this applies to every individual within India but there is an acceptance as national traits and characteristics go, the Indian people have a tendency to develop their skills and are happy to study new skills. This makes them very attractive to foreign firms looking for an emerging workforce to replace their own model.

Given that there is a learning curve in India, it follows on that the wages used to pay the staff in India will be of a lower nature. This makes sense as in any country in the world, a training wage is always liable to be of a lower level than a fully trained up person would obtain. This goes hand in hand with the fact that the standard of living and the average wage in India is of a smaller level than it is in most countries, which means that companies can greatly improve their labor costs by moving their work to India.

With the current economic climate being what it is, every company has to do its best to ensure that they are behaving with financial sense and are able to justify their decisions. If any firm can receive a product from one supplier at a far lower cost than what they would from another, and with no other difference in the product, it is sensible for them to go with the cheaper supplier. The exact same principle applies to outsourcing and this is why many firms are choosing to go with an Indian based outsourcing supplier.

The quality of work and service that is created and produced in India is very comparable to what is on offer from so many other nations and the fact that the labor costs are much lower is enough to make India stand out. There are many reasons why India holds the position it does but for many businesses, the bottom line is King and this is an area where India is extremely hard to beat. If you need to lower your expenditure on labor, heading to India may give you a great start.

When looking for new industries to back and promote, a government needs to look at the bigger picture to determine where their money may be better spent. Some posts are likely to have a more attractive knock-on effect and this is where the efficient governments and companies will be putting their money. Finding out which posts are more likely to lead to the creation of jobs in other industries or perhaps having a more positive impact on the economy is of great value and thankfully, there has been a large amount of research undertaken on this topic. For a developing country that may not have too many opportunities to get it right, this information can prove vital in their development. One such nation who would definitely benefit from gaining an improved return for their money is Ghana and the findings of the potential IT outsourcing benefits has been of great value to them.

It is said that for every single job that it created in the outsourcing of communications, a further four jobs in additional industries are created. These extra posts can be seen in training, catering, transportation or even real estate positions. It has to be remembered that the economy does not exist in a vacuum and each action is likely to have a reaction in other places. Some may be negative but it is vital for a government to find the positive aspects and then focus on these instances. Knowing that there is a huge demand for outsourcing in the communications sector should provide the confidence to place money and resources into training staff in these skills.

There are now many nations who are realizing that India is possibly reaching its peak with regards to outsourcing at a low price and any development it makes from now will be with regards to quality. That is of great benefit to many companies but equally, some firms are looking to achieve work of a reasonable level but at the lowest cost possible. It is possible for developing nations like Ghana to undercut the cost of outsourcing to India and thereby they can hopefully take a great deal of this action, which should help stimulate the Ghanaian economy.

There is no doubt that there needs to be a concerted effort in Ghana to bring the working population up to the skilled level of IT and communicational knowledge that would be required from firms who are looking to outsource their work. However, if a general decision can be made to move the nation towards working towards this goal, it will be easier to develop a training plan that will make this goal more achievable. In order for nations like Ghana to transform their economy, they sometimes need to make major decisions that will shape their future. There is no doubt that many companies have seen that outsourcing has helped to transform their fortunes, even during these tough economic times. If Ghana wants to develop a stronger future, taking steps to train their working population to provide a high level of IT outsourcing may see them make great advances in their economy.