Outsourcing to India: What you need to know

Outsourcing has proven itself to be a beneficial, win-win move for companies and their employees. Not only does it help businesses outsource their repetitive tasks to an offshore team, but it also helps employees find jobs that are perfectly suited for their skills and capabilities.

India is probably the first country that people think about when it comes to outsourcing since it has built a name for itself in the outsourcing industry. Even while surrounded by other emerging outsourcing destinations, India continues to stand out.

Fast facts about outsourcing to India

India is widely known around the globe as an outsourcing haven, as the country offers excellent services for an affordable cost, provided by a young, diverse labor pool of dedicated employees. 

Here are some fast facts about outsourcing to India:

• India ranked 35th out of 100 in the world in English Proficiency and fifth out of 25 countries in Asia.
• According to India’s outsourcing body, the National Association of Software and Services Companies (NASSCOM), the information technology (IT) and business process outsourcing (BPO) industry in India garnered $154 billion in revenue in 2019.
• The Indian government is fully supportive of developing its IT and outsourcing industry.
• India’s outsourcing industry coverage is diverse. They have clients from manufacturing, healthcare, travel, telecommunications, retail, and media.
• The most popularly outsourced services to India in 2018 and 2019 were mobile application development, customer support, data entry, BPO, and data center operations.

Why do companies outsource to India?

Through the years, India faces really tight competition within the BPO industry, from the Philippines, Bangladesh, Poland, and the United States. However, the country still manages to be recognized as a leading outsourcing destination in the world.

How do they do this? What are the advantages of outsourcing to India?

Budget-friendly services and flexible pricing options

In-house developers in India can be negotiated to around $15 per hour. It’s very cost-effective, especially if you compare it to hiring in-house, where developers cost around $80 per hour. The development cost in India is 30 to 35 per cent lower compared to the US and Europe.

Indian outsourcing companies also offer flexible pricing options. You can pay by the hour, by the week, per month, or project. The pricing flexibility allows companies more freedom and creativity in managing their budget.

English communication is not a barrier

India claims to be the world’s second-largest English-speaking country, second only to the United States. Its English-speaking population of 125 million is expected to quadruple in the next decade.

If this doesn’t convince you that communication is not going to be a barrier when outsourcing in India, we don’t know what will.

Larger labor pool

Around 3.1 million fresh graduates join the Indian workforce every year, so outsourcing companies and clients can get access to a much larger labor pool. The quality of the country’s professional talent also attracts companies to choose India for their outsourcing needs.

Well-developed infrastructure and technology

India provides state-of-the-art technology and cellular networks in all major cities and towns. Because of this, clients are sure that their outsourced employees will be using the latest and best in software technology. The Indian government has also invested in infrastructure and technology to reflect international standards.

The cons of outsourcing to India

Outsourcing your non-essential tasks is generally a good idea, as long as you have chosen the right outsourcing partner. The key is doing enough research to find the best Indian BPO company that would work well with your company.

Confidentiality issues and data security risks

When outsourcing, you might lack the assurance of how your service provider handles your data, which risks your data security. To deal with these issues, companies should sign a non-disclosure agreement with their outsourcing partner. 

Unwanted/hidden expenses

Making the mistake of partnering with the wrong outsourcing services provider can add up more expenses. 

Cultural and communication differences

Time zones can be a problem especially for urgent cases, as some teams can sometimes take over 24 hours to fix a single issue. Your team may also need to adjust to and accommodate social and cultural practices of the vendor. This includes native language and accents that cause communication difficulties amongst parties.

India’s outsourcing competitors

India will always belong to the top options when it comes to choosing an outsourcing destination. However, as mentioned above, the country comes neck and neck with other developing outsourcing destinations around the world. Let’s get to know India’s competitors:

1. The Philippines

The Tholons Globalization Index ranked Manila, the Philippine capital, as the second-best city for outsourcing in the world in 2018. With over 92 percent of Filipinos who can speak English, combined with the low global value of the Philippine peso and the country’s serious educational reform in the past several years, the Philippines is on its way to becoming globally recognized as the world’s leading outsourcing destination.

2. Poland

HackerRank has named Poland as the country with the third most skilled programmers in the world. The country’s tech expertise is partnered with its employees’ English fluency since fluent English is a standard for graduates. Some Western companies also opt to outsource to Poland since the time difference is acceptable and their price is still relatively low.

3. Brazil

Brazil was dubbed as the IT outsourcing alternative to India in 2010 and has been an emerging force in IT outsourcing since then. The country takes pride in its relatively young workforce (38.18% of its working population is under 24 years old), as well as its 6.18 million fluent English speakers.