software outsourcing to India

Inid has emphasized, they will want a new world trade pact which will prevent US and european countries to ban offshore software outsourcing jobs. Many different proposals in US congress in recent years have sent alarm bells in Newdelhi. And to prevent this to become a law, India expects US to lock in current legislations which allow companies to move their work offshore as a part of new world trade agreement. This was mentioned by Minister of Commerce, Mr. Kamal Nath.

Mr. Nath also mentioned, "We are very concerned with the U.S. binding the current situation because all these noises just keep coming," in speech to the US-India business council. India is rapidly growing its software industry and it is a vital part of GDP. Banglore and other IT developed countries like hydrabad have became widely known in software outsourcing and other IT related services. Indian offshore service business is employing 900,000 people and it is considered that, it will double jobs by 2008. According to Mr. Nath, concerns about outsourcing are more related to emotions rather then economy. He mentioned that, US companies can lower their cost by tapping India's plentiful well educated work force.

India is also loooking at short term one year visit by their professionals. This issue is very sensitive as many US law makers view it as backdoor immigration channel and are opposing it strongly. There are many programmers working inUS with business visa under software outsourcing deal.

Software outsourcing India - Tatvasoft

Rush for Outsourcing to India

According to estimation of Nasscom, over 660 multinational companies are coming yearly to India. And each company brings business of over 1 million dollar. Biggest reason for this attraction is cost. India has cheap labor. While, in US and other developed countries, rates vary from 55$ to 65$ per hour, in India, it ranges widely from $5 per hour to $26 per hour.

Offshoring is not just limited to software development but it ranges widely from software development, maintanance to other IT enabled services like call center and backoffice work. Nasscom expected indian revenue to be around 17 billion US $ but it crossed expectation to 22 billion $. It is because 400 out of top 500 fortune companies have their own centers in India or they are outsourcing to Indian technology firms. It is expected that, this growth will continue and Indian export will reach $ 48 billion by the end of year 2008 whcih will be 51% of total outsourcing business. By the end fiscal year 2004-05, Indian outsourcing industry employed 1.05 million people and giving indirect employement to 2.5 million people.

India Software Development - Tatvasoft

Cultural difference in offshore outsourcing

There is a big cultural difference in offshore outsourcing. American programmers have higher comfort level with speaking up and offering suggestions. A good programmer can say, what you have been asking did not make sense. While on the other hand, indian programmer will mention, though it dont make sense, it is what client wants. Thus it may happen that, work takes more time then you anticipate. Also, common scenarios in US like creating an automation system for customer credit card or using hand held pam device for any application is very common for US programmer while it can be a foreign concept in India. Also, majority of indian IT companies are very young. Their average age is below 27 years.

So all factors affect aruond 20% of work decline in the efficiency of application development. However, this gap gets smaller and smaller as people work together. So in initial phase, cost of software development can be higher but it decreases evantually. Also, there can be other factors like high turnover of offshore programmers. Attrition rate is very high around 35% because of many multinational companies opening their offices in India and offering salary higher then what a programmer is getting. So it is always good to address this issue in contract while dealing with offshore provider.

Last problem is communication and ascent. Offshore software programmers dont interpret issues as easily as in US. Also ascent makes problem. General communication takes place by phone line but in smaller companies often it takes place on messengers, skype or IP phone.

Offshore outsourcing at Tatvasoft - Your one stop solution.

IT service growth in India

According to National association of software and services companies (Nasscom), India's export revenues from software outsourcing has exceeded its target and will reach 17.3 billion dollars in the financial year 2004-05. In the financial year 2003-04, indian software export was 12.8 billion dollar. Indian IT industry employs 7,70,000 people and it will continue to rise as the preferred destination of offshoring. Countries like china, russia, phillipines and eastern european countries are competing but india will remain preferred destination because of many reasons. Country like china has around 800 software companies out of which, only five has over 2000 employees. While on the other hand, India has just below 3000 software companies and has over 15 IT companies with more then 2000 employees. It will take few years for china to pose any threat to th leadership of its continental rival India in the field of software development.

Offshore outsourcing services

Good time ahead for indian offshore service providers

Top three indian companies have announced their results which show significant financial growth and no sign of slowing down of offshore business. Outsourcing giant Wipro announced 15.83 billion rupees profit for the financial year 2004-05 which was an increase of 58% comapre to last year. Tata Consultancy services announced profit of 22.56 billion rupees. While Infosys has announced $419m profit for the end of financial year 2004-05.

Trends and analysis shows that, offshoring will continue to rise. According to Gartner, currently only 3% of the globla information technology services is outsourced to countries like India and china. By 2008, only 7% will be shifted to these cheap labour countries. While some other companies like NeoIT have very optimistic view that, offshoring will grow significantly and by the end of 2005, 80% of global 2000 companies will have offshoring presence.

Offshore outsourcing - Tatvasoft

Software outsourcing to India

India is leading offshore outsourcing destination since a decade. There are many reasons for that like cheap labor, technological agility, low cost and faster time to market, huge English speaking talent pool etc. In today's highly competitive software development business, offshore outsourcing is becoming necessary to maintain competitive advantage and drive down operating costs. US and European developed countries have discovered 40 to 60 percent cost saving as a result of software outsourcing. And what can be a preferred destination for that other then India. India is a talent-rich country. A huge pool of English speaking and computer literate manpower from Indian colleges can continue to cater to the growing demand of software professionals. India has 200 million English speaking people next to US which has 250 million English speaking populations.

Software outsourcing hub India is exporter of software development services to 95 countries. According to Gartner, India is leader in outsourcing and will continue its leadership till 2010. With export to many countries and relation to different culture, India is leader in global methodologies.

Leading companies world wide like Microsoft, IBM, HP, Sun have learned that to maintain their competitive advantage and stay ahead in the race and provide better value to their share holders, they need to reduce cost without compromising quality. For that, India provides highly skilled programmers and project managers who are tech savvy, reliable and innovative. Also, Indian companies are have developed world class systems for global majors. Quality and maturity of Indian software companies can be measured from the fact that, over 50% of the SEI CMM level 5 companies world wide are in India.

Also for software outsourcing, India enjoys confidence of multination corporations. According to a survey, 82% US companies mentioned that, India is their first choice for software outsourcing. Bill Clinton has applauded India's brain power and pointed that, Indian American run more then 750 IT companies in Silicon Valley. He also mentioned, ."You liberated your markets and now you have one of the 10 fastest growing economies in the world'. Bill Gates has mentioned that India is IT super power. That’s why Microsoft has strategic alliances with wipro and infosys for their .NET development platform. GE has $130 million technology center in Bangalore. It is largest research center outside US opened by GE. There are hundreds of multinational companies opening their offices in Bangalore.

Government of India is also keen to develop IT industry. India is biggest democracy of world and has world's 10th fastest growing economy. Indian government is trying to make India world's back office with its 1 billion population. According to Nasscom, India's revenue from IT enabled services will rich $16.94 billion. Government has also passed Information Technology Act 2000 which is now widely known as IT Act 2000. It brings e-commerce under law and states punishments for "cyber criminals". With this, India is in the league of 12 nations who have cyber laws. Government of India is providing tax benefits under STPI, SEZ and many other schemes to IT companies and promoting IT export. Special policies like single window clearance have been implemented. STPI offers world class infrastructure and various facilities, incentives to promote software development and export. It also allows 100% tax benefit. Because of all benefits given by government, Indian IT business is growing at the rate of above 40% and contributing heavily to its GDP.

Software outsourcing to India - Tatvasoft

Global outsourcing

Global outsourcing - Around 25% of high technology jobs today in developed countries will go to emerging market like russia by 2010. This was reported by Gartner Inc., world leader in research. Gartner presented its analysis and trend in outsourcing at Symposium ITxpo in Barcelona, Spain.

According to Roger Cox, Managing Vice President, Gartner "Last year saw a phenomenon in Europe,Out of 15 one billion US dollar mega-deals signed in 2003, 10 were awarded by Europe-based enterprises. Until 2003, Europe-based organisations had only signed a total of 14 mega-deals since 1989." Vicepresident Ian Marriott mentioned that, global outsourcing is becoming mainstream delivery model.

Potential cost advantages of outsourcing are such a high that, comapnies whicha are not considering outsourcing seriously are harming their shareholders. On the other hand, busienss also loose its competitive advantage and inability to focus on growth.

It was also mentioned that, India is the prefeered destination for outsourcing, although china and russia are picking up as strong contenders. Many other countries are also eyeing the potential offshore software outsourcing business. Though outsourcing boom was late in Europe compare to US, it is catching up well with year 2003 as turning point.

Mr. Marriot also mentioned, "There is no doubt that the predicted shift in jobs associated with global sourcing is a harsh reality. However, there is nothing new about technology causing massive shifts in how and where people work. This is an unavoidable outcome of how the global marketplace operates today and western economies have been successful in navigating successive waves of economic transformation in the past."

Gartner also mentioned need of investment in new skills for organizations to make outsourcing work and that will create additional jobs.

UK becoming hottest destination for Indian outsourcing comapanies

According to new report, first time, UK has became leading market for outsourcing. The UK has overtaken US to become the top national market for new outsourcing contracts. According to TPI, UK represented 37% of the market for major outsourcing contracts awarded worldwide in this year. UK is followed by US - 25% and Asia-Pacific with 4%. However, it is understood that, UK will not continue its leading position as majority of the outsourcing chunk is because of deals by Reuters and BT. Even in this quarter, without reuters and BT, UK would have been second largest national market.

However, Europe still dominates market and accounted for over 50% of the new contracts worldwide. According to Duncan Aitchison, TPI's Managing Director, International:
“While some may argue that Europe’s €2.4 billion mega deal – the Reuters/BT contract – skews the results for this first quarter, Europe still accounted for well over half (57%) of new contracts worldwide – a high point for European outsourcing.”

Also, so-called big six supplers in the outsourcing market which are - Accenture, ACS, CSC, EDS, HP and IBM have seen their combined market sahre to fall by 57% in the first quarter of 2005. 60% of the senior management in UK comapnies are looking at big indian outsourcing providers who are providing outsourcing services like their western counterparts but at low cost. This growing confidence in Indian outsourcing companies will further allow increase in their market share and decrease in the market share of big six and other western consulting companies. This also gives a wider choice for clients.

Though confidence in Indian outsourcing companies is increasing, news like cheating creditcard by the employees of indian BPO companies can affect them. According to reports the some employees of indian BPO company used their call centre positions to trick customers into giving them their creditcard numbers.

Tatvasoft - Software outsourcing India