September 28, 2020
The business practice, in which an organization hires another company to perform its tasks, processes, and its functions is called BPO (Business Process Outsourcing). In BPO, companies could outsource their work to hire the perfect employees that they cannot find locally or to reduce the total cost of their project etc.
Business Process Outsourcing works at three levels:
Now here before moving further on about Offshoring, let us clear an important misunderstanding about outsourcing and offshoring. Outsourcing and Offshoring both are similar yet very different from one other. Let me tell you how:
Offshoring as a Better Practice than Outsourcing:
Normal Outsourcing is contracting out overall internal operations to a third-party. The basic agenda behind outsourcing is to move transactional activities (necessary for the development of products and services) to the experts outside the organization, in order to enable the organization to focus on its core competencies
Many companies ‘spun off’ their functions and sort greater specialization on the areas which earn them ‘the most profit’. However, if on one hand, a company manages to reduce cost profile, on the other hand, it also loses its own power on the operations.
Unlike outsourcing, offshoring acts more in the favor of the client and proves to be cost-effective. Offshoring is primarily a geographic activity. Offshoring is an extension of your local team but in a foreign country. Expensive labor, products and property or resource scarcity can be the driving force behind offshoring.
Under offshoring, clients will set up their own teams under the company and the Offshore company will help them by hiring people on service provider’s payroll and also provide them with resources to execute the project such as office, laptops, internet, and compliances, etc. The actual amount will be charged for all the services and resources.
This is where Offshoring takes over Outsourcing. As in outsourcing, the company will hand over the entire operation to a third party. Not only this will cost them to lose their rights to operate on the project but this will also cost them higher . While under offshoring the client will retain hold over the project through his extended team and this will also prove cost-effective to him as it will cost at-least 50% lesser than outsourcing the same,
We can say that Offshoring is the principle of attaining greater total revenue by specialization and trade than outsourcing.
Practice of Offshoring in Informational Technology:
Offshoring is also the most demanding practice in the Information Technology sector. The software companies adopt offshoring outsource processes due to the ongoing shortage of IT professionals. The small to medium-scale ICT companies face difficulties in finding skilled yet affordable developers.
Therefore, these companies prefer to offshore their tasks to the countries where there is a vast pool of skilled, affordable, and highly experienced developers.
Among these countries, the most in-demand country for offshoring is India. In fact, According to the National Association of Software and Services Companies (NASSCOM), India is the most preferred software development outsourcing destination globally.
Furthermore, India is the world’s second-largest exporter of software (after the U.S). The number of software companies, with ISO 9000 certification, registered under India more than any other country.
India provides the USA and other countries, the finest and cost-effective offshore service ranging from software development to technical support. Offshoring to India has benefitted many small to medium-scale ICT companies as well as the huge multinational companies in the USA.
There are many benefits of offshoring to India, which we are going to discuss in details below:
The Six Key Advantages of Offshoring to India:
The companies in India provide the offshoring companies quality work at minimum cost. The software development or technical support team of western countries is very expensive. However, when you offshore to India, it cuts down the cost without compromising the quality. It is because it eases the cost of employee recruitment, supervision, salary, and other benefits too.
It also enables the company not to invest in property depreciation and buying of equipment. Statistically, the company could save up to 50% by offshoring to India.
The offshore software development team in India comprises of highly professional and experienced developers. Their vast experience makes them capable of fulfilling all the requirements of the outsourcer. In addition, their polished skills enable them to adapt technology appropriately for each specified task.
As per the National Outsourcing Association (NOA), India is a preferred offshore destination, not only for the cost-benefit but also for the other benefits such as excellent quality services with a “can do” attitude and reduced time-to-market.
In India, IT is the top-notch industry, which creates huge revenues for the government. India has policies that welcome investments. After India passed the bill “IT acts 2000” it came to be recognized as the most preferred potential investment destination.
The government of India has not only recognized Information Technology as a development factor for the country, but it has also provided tax-related benefits. The Indian government is continuously focused on liberalizing certain markets, which are beneficial to outsourcers.
India has attained a deep-rooted connection with the English language because of its history with the Britishers. Nowadays, a huge population of India whether a lower, middle, or upper class can easily communicate in English.
Hence, it enables better communication and understanding between the offshore and the Indian software development teams.
Not only financial resources but also mainly a skilled workforce can promise efficient software development. India has 400 universities and 1500 research institutes. It produces 200,000 engineers’ graduates every year. There is no shortage of young and highly qualified technical professionals.
Talking about the large pool of young talented professionals, India is second to none. It has 380 universities and 11,200 HEC institutions that produce 2.1 million graduates each year. This makes the recruitment process easy for companies, as they have many options to choose from.
Everybody loves to save money, even the huge Western multinational companies. Therefore, global business giants such as Oracle, Hewlett-Packard, Cisco prefer to offshore their workload to India. Because In India, by contrast to other nations, vast inexpensive, yet efficient labor pools provide an easy bedrock for a low-cost economy. Hence, we can conclude that the benefits of offshoring the services to India is not just numerous but manifold.
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