Outsourcing to India: The Future Remains Bright

 Ever since India's former finance minister, Dr. Manmohan Singh, ushered globalisation into the country through the economic liberalisation plan, outsourcing to India has been one of the most popular and economically powerful sectors of the Indian economy. In two decades since then, India's outsourcing industry has experienced phenomenal growth because of the country's large labour pool, government support, and low costs. "Today, however – much like the rest of the offshoring industry – outsourcing in India is evolving. The country is in an enviable position to maintain its global leadership as an outsourcing powerhouse as a result of some key factors," says Ralf Ellspermann, CEO of PITON-Global, an award-winning call centre and back-office outsourcing provider.

India was the pioneer of the offshore IT and Business Process Outsourcing (BPO) industry in the mid-80s. To this day, the country is still the world's largest and leading offshore IT and BPO destination. It is indisputable, and it is one of the reasons the future of outsourcing to India looks so bright. The country has maintained the largest market share and the largest number of people employed within the industry. India also has a clear edge over other offshore outsourcing destinations in IT and most non-voice related BPO and KPO services, especially the more complex ones. The country's established dominance in this specific segment of the outsourcing industry makes it ideally positioned to take advantage of future outsourcing trends by capitalising on its strengths.

The second advantage India has to offer companies that need outsourcing services is the availability of a large, highly-skilled, and educated workforce. When combined with its English language proficiency and the number of cities in which it is available, this workforce makes India's workforce an unmatched asset. The country's productive and talented labour pool places India above other countries like China and Malaysia. The growth of cloud computing and e-commerce, for example, have also helped to accelerate the development of India's ITES and BPO industries, as the country has the largest and most talented pool of labour to meet this demand. India is the world's largest offshore outsourcing destination for IT services, which is a testament to its talented labour pool. "Especially in the IT field, India's workforce is one of the most educated and advanced in the world. In addition, India is currently home to the third-largest number of engineering and technology graduates globally, and this number is only expected to grow in the future. This focus on high-value IT-enabled work is another very important factor for the future of outsourcing to India," says Ellspermann.

Another factor contributing to India's future as an outsourcing powerhouse is shifting towards higher-value services. Simple and highly repetitive outsourcing services are gradually being replaced by more complex and knowledge-intensive services, known as Knowledge Process Outsourcing (KPO). The KPO sector in India is growing rapidly because the country has both the human capital and the IT background to support this growth, which is expected to continue aggressively. Industries, including automotive, BFSI, healthcare, and manufacturing, among others, are driving the development of this sector, and India's dominance in the ITES and BPO industries positions it perfectly to take advantage of this KPO trend. These factors will help India maintain a leading role in outsourcing into the future, but the country must also understand that the outsourcing industry is becoming extremely competitive. Newer players have progressed in the global outsourcing market, such as Ukraine.

The Philippines has also catapulted to a leading position as the outsourcing destination of choice for US-based companies. In fact, for voice-related outsourcing services, the Philippines has been the global leader for over a decade now. According to Ellspermann, "The country's success is largely based on its cultural affinity to the US, and high rates of American-English language proficiency. With less detectable accents than their Indian counterparts, outsourcing providers in the Philippines have been able to corner the market for voice-related outsourcing services." Understanding the outsourcing competition will be important going forward, but with its established position, outsourcing to India should continue to be the popular choice for many companies worldwide.