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A Rebuttal to Charges Against Indian Outsourcing Industry

Of late, outsourcing to India has received scathing attacks from a few quarters, notably passioncomputing.com.au. From the poor quality of its programmers to the crumbling infrastructure, from data thefts to missed deadlines, just about every aspect has been put through the wringer. However, if outsourcing to India was so bad, it would not continue to rule the outsourcing industry, despite competition from other rival destinations. The bottom line is that India is the most favoured outsourcing destination in the world today,a position that is unlikely to be shaken anytime soon.

 There are always rotten apples in any industry and outsourcing is no exception. There have been many fly-by-night service providers in India who have jumped onto the outsourcing bandwagon just to make a quick killing. Unfortunately, if they have been the first brush with outsourcing for new entrants in the UK or the US or Australia, then the entire Indian outsourcing industry tends to get tarnished negatively.

India has been widely acknowledged as the outsourcing hub of the world, particularly IT and software outsourcing.

Statistics speak for themselves.

  • India exports software to 95 countries across the globe
  • Bill Gates has called Indian ‘IT superpower’ on more than one occasion, enteringin to major alliances with top Indian IT companies like Wipro and Infosys to develop applications on the .Net platform
  • Indian-Americans run more than 750 companies in America’s Silicon Valley
  • India alone commands 65 percent of the worl’s BPO offshore outsourcing market
  • Jack Welch opened a $130 million Technology Center in Bangalore, GE’s largest R&D center outside the US: celebrates 10 years of GE Medical Systems in India
  • 80 percent of US and European outsourcing firms ranked India as their number one outsourcing destination
  • Multinational giants like Cisco, Oracle or Hewlett Packard outsource to India. We believe that India is the hub of the world where the ICT sector is concerned,”  said Mr Elfrink, of Cisco Systems, after the company invested $1.1 billion in outsourcing to India)

There has to be a reason why a developed nation like the US would choose India and Indian software programmers to handle their IT requirements.

Let’s tackle the allegations one by one.

Allegation 1- Outsourcing to India is not cheaper

The Reality

At the core of all outsourcing success is the economics of the whole thing. Outsourcing to India has been wildly successful precisely because it offered companies in the developed nation substantial costs savings while simultaneously enjoying the talent and skills that Indians lent to the outsourced work. An Indian software programmer costs merely a fraction of the salary that is commanded by a similarly qualified professional in the developed nations. While the larger multinationals may not think twice before hiring them, such professionals who come with a high price tag are often beyond the reach of the small and medium-sized enterprises. It is for them that offshore outsourcing provides a perfect blend of high skills and affordable costs.

Furthermore, clients often incorrectly calculate the full cost saving outsourcing brings, which leads them to incorrectly presume that India is not cheaper.

If the cost of hiring a programmer with an Indian company is $1500 per month and the salary of a developer in America or Australia is $4000 per month, then many clients would say the cost benefit of outsourcing is $2500 per month. This, however, is incorrect because when a client hires a programmer in India for $1500, this covers the entire cost of outsourcing and not just the employee”s salary. The client does not pay for (but gets it, nevertheless) HR, recruitment, tax, insurance, infrastructure, hardware, technical support, office rental costs etc. When hiring locally, however, the client has to bear the expenses for all these overheads and so if the salary alone of the developer is $4000, the actual cost of hiring the developer could well shoot up to be in the region of $5000-$6000 per month, once all business costs are factored in.

Another mistake that clients make when concluding that India is not “œmuch cheaper” is to not compare like-for-like positions. The cost of hiring a very senior programmer, (6-7 years of experience) in India can be $2000 – $2200 per month. This often seems high to many clients who feel that this price can get them affordable local talent back home. However, $2000 would only enable a client to hire a junior resource; a senior programmer in the US can command a salary of $10,000 per month. Only by comparing like-for-like positions can the true cost saving of outsourcing be really appreciated. So, comparing the cost of a nior developer in India to the cost of hiring a junior developer in the US is completely illogical.

Freelancers

Outsourcing has traditionally been associated with freelancers, that massive, largely unorganized segment which was the original foundation of outsourcing. Freelancers were easy to find, easy to hire and easy to dispense with. It should have all been smooth sailing, but reality was often a wake-up call. Freelancers were definitely very cheap but they mostly worked from home and usually alone and unsupervised. And since competition was fierce, it often meant that one single freelancer was juggling multiple assignments for several clients all at once.

Additionally, freelancers were simply not fit to handle long-term work.

Project Outsourcing

This is the second form of outsourcing, also known as outright project outsourcing. Initially, almost all the IT and software work that was outsourced took this route. Entire projects were outsourced to software companies here in India. A team worked on the project – which was just of the many it was handling – and the client received the results either in a piecemeal fashion or right at the end of the assignment. There was much back and forth of feedback, often substantial delays and often less-than-satisfactory work as well. Obviously, project outsourcing was more expensive than outsourcing to a freelancer but a better option for complex projects.

The Virtual Employee “ the best option and more cost-effective in the long run

Those who have tried it swear by it because it has completely revolutionized the outsourcing process. The virtual employee is simply an employee hired by you, who works exclusively for you from the outsourcing vendor’s office, and is a dedicated human resource. The only difference is that the remote or virtual employee sits halfway across the globe unlike the physically present employee who works a few feet or floors away.

More and more companies and businesses in the west are outsourcing their work – in particular, long-term projects like software application development, website design and development, database management, recruitment services, and much else – to reputed and well-established outsourcing vendors in India who can provide them with a virtual employee.

A Virtual Employee scores above a Freelancer and Project Outsourcing

A Virtual Employee is a definite improvement on both the existing options of either freelancing or project outsourcing.

  1. A Virtual Employee is the best bet for any outsourcing that requires intensive collaboration and communication between the client and their employee. This can be a boon for complex software development, where any glitches can be addressed right at the fledgling stage of the project itself.
  2. A Virtual Employee works from the controlled office of the vendor, which is well-equipped with all the latest hardware and software and technology. So, commonly perceived hurdles specific to Third World countries like slow internet connection and power outages may affect a freelancer, but rarely a virtual employee.
  3. A Virtual Employee is a client’s very own employee with the vendor’s office functioning as an offshore extension office in a foreign country. The vendor’s HR, IT and Accounts executives all work to manage and supervise your employee for you.

Allegation 2 – Outsourcing to India is not easy

The Reality

Outsourcing to India is very easy if you choose your outsourcing partner carefully. Low costs should never be the sole deciding criteria. A lot of factors go into ensuring the success of any outsourcing process but the main element has got to be the choice of the vendor or the outsourcing partner. This is what stands between success and your outsourced wok.

The right vendor will cater to the following:

  • Cultural differences between the two countries and respecting them
  • Providing you with proficient English-speaking employees
  • Providing you with highly skilled and qualified professionals in the domain you desire
  • Providing you with excellent hardware, software and advanced technology to make communicating with your remote employee absolutely easy. The really reputed vendors have technology such as video conferencing that enables clients to have a real face-to-face conversation with their employees as often as they wish, just as they would with a physically present employee back home.

Allegation 3 – Outsourcing to India endangers crucial data

The Reality

Data security is one of the most crucial concerns in outsourcing and justifiably so. A vast amount of sensitive information is flying around on the internet and yes, it can get misused. However, again, the stress is on choosing the right outsourcing vendor who assures data security.

Understandably, a freelancer who works from home does so with limited resources and with restricted access to advanced technology and expensive software. Add to that the fact that the average freelancer works with several clients simultaneously, handling their data and juggling multiple deadlines. Data security, therefore, is the biggest concern when outsourcing to freelancers.

However, when it comes to a virtual employee, data security is a given. Why? Because the outsourcing vendor has an iron-clad contract, complete with a NDA (Non-Disclosure Agreement) in place, and which has to be signed by the employee at the time of joining. In addition, the vendor installs firewalls, security software, CCTVs and other modern means of monitoring the movements of an employee to ensure that your confidential information never gets compromised upon.

Allegation 4 – Poor communication plagues outsourcing to India

The Reality

India has the second-largest English-speaking population in the world. Its 700-plus universities produce approximately 3.1 million graduates each year, since Indians place a very high premium on education. Further diversification and specialization leads to the creation of an impressive and abundant talent pool, teeming with experts who are eagerly picked up by companies in the West, be it in finance, software, medicine or law.

These things need to be kept in mind while outsourcing to India:

  1. Communication will always pose a problem if the outsourcing partner is a freelancer. Thanks to the different time zones and the fact that the freelancer probably has limited access to advanced technology, a client isn’t always able to communicate with a freelancer at the time that they want to. This works out fine if the outsourced work is a short-term and low-budget one, not requiring too many regular inputs from the client. But can prove to be disastrous if the work is a long-term and complex one.
  2. A Virtual Employee works from the office of the outsourcing vendor and so is always accessible at the times that a client wants. The virtual employee can be made to work exactly the same work shift as the client; or even overlapping shifts. Any non-work related issues like payments, work performance or technical hiccups can be discussed with the vendor’s support staff that is available 24×7. All reputed and well-established service providers are characterized by these features.

Finally, why should you outsource to India?

  1. India has the largest pool of technical skills in the world. With such a skilled workforce it is easy for outsourcing companies to find the talented employees they require at affordable rates.
  2. Additionally, India is a one stop outsourcing destination.- India accommodates all the outsourcing requirements of a company .Companies can outsource to India, engineering, accounts, law, graphics design, marketing, HR, data entry etc…India caters for a lot more than just call centers or I.T programmers.
  3. China is the only other country which comes even remotely close to India in terms of numbers. However, China is not considered an outsourcing competitor to India because professionals in China unlike India do not speak English.
  4. India has excellent international data communication links and internet access in major cities. With the Indian economy rapidly growing, the Indian government has invested heavily in infrastructure, technology and communication links.
  5. When companies such as Cisco, Oracle or Hewlett Packard outsource to India they do so because they are confident they will have access to talent, quality results, fast turnaround times and low costs. That so many multi-billion dollar companies outsource to India is yet further evidence that India is renowned around the world as the outsourcing hub of the world.
  6. India holds an edge as it commands global confidence to produce perfect Turn Around Time (TAT), a recent study by recruitment solutions provided Elixier solutions shows.
  7. Google has set up its R&D center in India, reportedly selecting only graduates of the nation’s top schools. The company’s move reflects the mindset that outsourcing to India is not just about low cost but also about Indian’s vast talent pool.

No industry is perfect and the outsourcing industry is a continually evolving one. A few negative experiences are inevitable – but then they can happen in any industry. Outsourcing must be entered into only after careful research, prudent background check of the vendor and it should most definitely not let merely low costs or the lowest bidder be the deciding factor.

 


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