why world governments outsource to Indian outsourcing companies

It’s not just private organizations who outsource to India, large number of government and semi-government departments of world governments also outsource to India. Of course, governments in the U.S. and the U.K. don’t outsource to India work related to military technology and work of sensitive nature, but they do outsource to India simple back office work and IT projects, such as data management, research, software packages, and administration, etc.

Though, it has been reported that many banks, airlines, and research organizations, while strictly not government, have chosen to outsource to India projects of varying kinds.

The latest endorsement from a world government to outsource to India comes from a former British Office of Government Commerce official Sir Peter Gershon, who has advised the Conservatives, who are campaigning against the ruling Labor government, to outsource all back office processing functions within 18 months of being elected.

As many British companies and government departments already do, this could result in more government departments to outsource to India.

Gershon told British media that in 2009, the Labor government's latest efficiency review had identified £18bn of spending on the back office and showed case studies where the private sector saved 35 per cent to 70 per cent.

Such a huge margin of cost saving is likely to encourage more world governments, as it has the British government, to outsource to India.

In the recent discourse on “outsource to India” on the world stage, one can point to the legislation in the U.S. government’s healthcare system by U.S. President Barack Obama. Reforms in U.S. healthcare, worth $2.5 trillion dollars, has generated demand for various kinds of jobs, many of which American government and private companies will outsource to India.

Indian outsourcing vendors have already started to prepare themselves for the onslaught of government jobs that American healthcare organizations will outsource to India. America’s private healthcare organizations and medical insurance companies will also outsource to India work related to medical billing, medical transcription, insurance, and other administrative tasks.

Management consultant McKinsey estimates that an overall amount of an astonishing $175 billion will be spent on growing Electronic Health Records between 2010 and 2020. About $50 billion will be assigned to IT services and training. U.S. companies dealing with this segment are likely to outsource to India a substantial chunk of this work.

U.S. government and private hospitals will outsource to India system set-up, installation, beta-testing, conversion of archival data into compatible formats.

Then there’s the rapidly growing world green economy with its own set of demand for products and services that many governments and private players will outsource to India.

Green investments are already showing results. According to the U.S. outsourcing research company Brown-Wilson Group’s 2009 Green Outsourcing Report, since the beginning of 2009, American government and semi-government and private players has chosen to outsource to India a whooping 22,000 green technology jobs.

This is a figure that’s only going to climb in the years to come—given the worldwide concerns about climate change.

Undeniably, world governments like to outsource to India due to the unbeatable combination of skill, low cost, talent, and stable government. These factors act as strategic collaterals for world governments, and as “trust” factors, when they outsource to India.

A reason not often discussed while discussing why government departments often outsource to India is the political and strategic perception of India as a country that does not pose threats based on overt and covert agendas. To give an example, a government department, anywhere in the world, will think twice before outsourcing basis data processing on technology research to China due to obvious strategic implications.

Thus, when all the discussed factors are taken into account, it pays to outsource to India—much better than any other outsourcing destination.