Misconceptions About India Often Results In Outsourcing Failure

Outsourcing often fails because clients have several misconceptions about India.  In many cases, clients do not have a good understanding about the market conditions in India, particularly the booming tier 1 cities. Clients are often arrogant, for without any knowledge many clients presume that they know what the cost of outsourcing should be and easily judge whether it is too expensive.

Perhaps the belief that India is a poor Third World Country, “even $100 goes a long way in India,” leads clients to making such judgments. As a result, too many clients are unwilling to pay the prices charged by reputed outsourcing companies because they believe they are too high for a country like India and that they are getting a raw deal. But how can a client judge an outsourcing vendor situated half way around the world and deduce that their service is too expensive? By comparing one outsourcing vendor with another? How can a client compare two outsourcing vendors, by comparing their websites? Surely this is naive? How can a client make a snap judgment on an outsourcing vendor without knowing the costs involved, the setup, investment, infrastructure and services an outsourcing vendor is providing? Are clients even aware that hardware and software is more expensive in India than the US because of import taxes? Or that maintaining international office standards and office overheads in India are more costly than in the US because of poor national infrastructure?

What clients’ further fail to appreciate is that that there are many rouge outsourcing vendors in India that prey on western clients who are obsessed with low costs. These vendors entice such clients with ridiculously low fees because they are not established nor experienced. Their capabilities, infrastructure, hardware, services and staff are often sub-standard and sometimes even non-existent. Many of these “companies” are not even in operation; apart from their website no office actually exists. Often these rouge outsourcing “vendors” simply re-sell the work they receive or the owner of the website attempts to do the work himself. Clients, however, fail to realize that anyone can make a website these days and that there is a huge gulf between established outsourcing firms and cow-boy opportunists.

The house of cards, however, sooner or later comes tumbling down when partnering with unfeasibly low costing outsourcing vendors. The clients then lambaste “outsourcing” and “incapable Indians”. But this could not be further from the truth; the fault lies with the client and the client’s decision-making process. If you hire a nurse to perform heart surgery because you are unwilling to pay the fees commanded by a doctor, then yes, the surgery is going to go desperately wrong. This is neither because the nurse is incapable nor because heart surgery is a flawed procedure. She is simply not equipped to handle a task of such magnitude. Similarly, if you hire a fresher programmer in America when you really require a senior resource you are unlikely to attain the results you want. This does not mean all programmers in America are incapable or even that the junior programmer is incompetent.  

Outsourcing can result in highly effective results provided clients outsource with reputed and experienced vendors. With labor costs in India cheaper than in the US or Europe, clients should focus on the bigger picture, i.e. the cost of hiring locally is very high as, too, are office costs. So, if by outsourcing a client can attain a similar result at a cost 33% - 100% lower than what is available locally, then the client has attained an excellent result. Going beyond this and instead comparing several vendors solely on cost, focusing purely on maximizing cost saving and partnering with an outsourcing vendor just because they are the cheapest leaves clients vulnerable to outsourcing failure. Clients need to research prior to outsourcing and gain a good knowledge of local markets to make an informed decision about outsourcing.