India’s demographics and history have positioned it well to take advantage of the new global IT services market. According to the National Association of Software & Service Companies, the Indian software industry lobby, almost half the Fortune 500 companies use Indian Software services.

The Americas and Europe are the largest customers for the Indian outsourcing industry and account for 60 percent and 31 percent respectively of IT and BPO exports.

India is the world's second largest exporter of software (after the U.S.), and is the source of management and technical talent for over 40 per cent of new start-ups in Silicon Valley. Thanks to its large English-speaking personnel (second only to the USA), India has more software companies with ISO 9000 certification than any other country in the world.

Advantages of offshore outsourcing to India

·         Low cost:Companies have been able to save 30-40 percent by outsourcing services to India.  Infrastructure costs in India are lower thus saving significantly on capital. For organizations who are still in there initial days of operations, every penny spent, counts

·         Time Zone Advantage:India, for example has a different time zone when compared to US and Europe. This has also increased the volume of job outsourcing to India. For India, this is a major advantage as jobs sent during the evening in the US can be completed in India during the day and sent back to the US. This has increased delivery time and organizations in the US are happy about this. The time zone advantage between India and US has increased job outsourcing to India.

·         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.

·         Educated and talented personnel:India has the largest English-speaking audience after the U.S. It has highly educated personnel that are talented, educated, experienced, technically-skilled and computer literate.

·         Reach:India exports software to more than 95 countries. The number speaks for itself.

·         Government’s support:India has a stable political environment and pro-IT government. IT is regarded as one of the top 5 priority industries in India. FDI investment from NRI's including Overseas Corporate Bodies (OCB's); owned by the NRI's are warmly welcomed in India.

·         Quality Service:Indian companies providing IT outsourcing services offer high quality work, meeting international standards and complying with the ISO & SEI-CMM standards. Three out of every four SEI-CMM 5 companies worldwide are located in India.

Future Trends in IT Outsourcing

Faced with a slow economic recovery IT leaders will continue to outsource in order to facilitate cost-savings. The market will also experience a surge in smaller IT service deals from first-time buyers.

Cloud sourcing which has often been predicted as the death of outsourcing, will soon merge with the existing outsourcing market and provide better opportunities for the entire industry.

Industry experts predict the emergence of a Latin America outsourcing boom especially in Brazil, Mexico, Chile, Colombia, Costa Rica and Peru. Service providers will also continue to shift their delivery centers to markets such as China, Philippines and Egypt, since these countries represent big markets with big demand for transformational and discretionary spend activity. Having said this, Indian outsourcing firms will still occupy the headlines as the world leader of outsourcing in the coming years. This is because its advantages over other regions still remain distinct. However, the Indian outsourcing industry will experience a significant change in the near future, with companies shifting to knowledge-intensive and value-added services that call for a new way of functioning.

The outsourcing industry will witness mergers between major Indian IT service providers and U.S.-based outsourcers, with the Indian companies on the buying end.

Industry experts also predict the emergence of a retail model in the outsourcing industry where service providers will be categorized into large operations offering reduced costs and middle- and lower-sized providers providing more customized service.

Leading countries will encourage multi-sourcing arrangements in future partly due to the socio-economic pressures and the economic incentives provided by local and federal government to encourage employment.

Pooja Thakkar