During the past decade, India has been leading the global outsourcing industry primarily through its huge pool of IT graduates and English-speaking workforce. However, of late there has been tremendous concern about whether India is fast losing its place as the leader in the outsourcing race or not. ValueNotes, an analyst firm focused on outsourcing, has identified two potential “situations”, which give you an idea about the future of the outsourcing industry in India.

Growing Competition?

According to a survey conducted by the global consultancy firm PricewaterhouseCoopers (PwC) and Duke University’s Offshoring Research Network, the outsourcing industry in India is likely to transform due to the emergence of new providers. Although India remains the outsourcing market leader, stiff competition is expected from China, Philippines, South Africa, Eastern Europe, Latin America and the Middle East.

PwC’s Managing Director Charles Aird said, “India’s success as the world’s back office has motivated other developing countries with well educated and under-employed populations to seek to duplicate their experience.” The survey further revealed that only 16% of Indian service providers see competitors from other emerging economies as a threat. This is because the economic crisis of 2009 has reemphasized the importance of cost savings and access to qualified personnel as two of the top strategic reasons for outsourcing. Indian service providers are capable of offering both, less costs and high-quality workforce. This is what makes India stand out from the other countries in the outsourcing domain.

Obama’s Anti-Outsourcing Stand

The offshore shift of skilled work to India has often been portrayed as the killer of good-paying American jobs. Now, this backlash has become a reality, with the recent passage of the federal law by the U.S. Senate, barring outsourcing of U.S. government contracts given by American firms to companies located in India and other countries.

However, Indian executives of companies that provide offshore services are surprisingly sanguine about the controversy. In fact, Manoj Kunkalienkar, the president of ICICI Infotech, an outsourcing company based in Mumbai, said, “Backlash is a passing phase, and ultimately, corporations as well as people will realize the greater business benefits.” This is because most economists in the United States and India concede that though American jobs will be lost initially, both countries will reap the benefits of outsourcing in the coming years.

At the moment, all seems to be well with India continuing to dominate the outsourcing scene. It will be interesting to see if the dominance is retained or challenged, in the future.

Know more about offshore outsourcing.

Outsourcing is a major business decision that has to be taken after much thought and deliberation. Any company deciding to outsource its business services needs to construct an efficient and stable outsourcing plan after the consideration of a number of factors like, the time required to complete a project, the available expertise, the types of services being outsourced, the capability of the offshore vendor to maintain confidentiality and the current market forecast.

To prevent a possible backfire as a result of outsourcing, a few rules are to be followed during the planning of the outsourcing process.

• Never outsource a core business process: The core business process of a company is vital and should never be outsourced. According to Simon Muthiora, the executive director of Skills Geographic Kenya Limited, a human resource recruitment company, “Core responsibilities that require experts are not outsourced. A company cannot outsource the services of a chief accountant. You may choose to retain a permanent employee for this and outsource payroll accountants.”

• Never outsource projects which demand a high level of confidentiality and managerial control: Outsourced projects often go beyond the control of the management. Thus, if your project demands a high level of confidentiality and managerial control, then at no cost should you outsource the project.

• Never outsource a long term business process: Employing your own staff for a long term process is always more advisable. Although your investment at training them will cost you more at the beginning, but once they are trained they will be able to do their jobs efficiently. It will prove to be cost-effective in the long run, rather than immediate cost benefits that you would derive from the outsourcing model.

• Never outsource a process which could hurt customer loyalty: Outsourcing of certain specific services may reduce customer confidence in your company. For example, customers may have developed a long lasting relationship with your front office employees and a decision to outsource such services may not be the wise thing to do.

Apart from avoiding outsourcing the type of services mentioned above, it is important to make a foolproof outsourcing plan, if at all you plan to outsource non-core, routine tasks to offshore service providers.

Ensure that you avail a trial (paid or free) of the company’s services before you outsource your operations completely. The trial will help you judge the quality and timeliness of the company’s services. Based on the trial you may or may not choose that company to outsource your routine tasks.

Also, when it comes to payment, never make full payment at the time of signing the SLA (service level agreement). There are some companies that disappear without giving you the promised deliverables. Hence, wait for all the deliverables to arrive. Check the quality of the work done. If there are any issues, report to the service provider. When everything is done, release the payment.

By keeping these points in mind while outsourcing, there are very little chances of your outsourcing plan backfiring.

High quality work delivered by Indian BPOs has led to the gradual development of another aspect to global outsourcing: Knowledge Process Outsourcing (KPO). Knowledge Process Outsourcing is information driven and a niche industry that is constantly engaged in the process of creating and dispersing business-centric information. According to a report by GlobalSourcing, the Global KPO industry is worth USD 17 billion, of which India is expected to attract as much as USD 12 billion. The Indian KPO industry plans to mop up this money by growing to a 250,000 strong professional sector, probably one of the largest in the world.

What Makes India An Attractive Destination for KPO Services?

Well, India has a huge English speaking population, technically trained and qualified in a diverse number of sectors. Indian companies deliver high value to companies by providing domain specific expertise rather than mere process expertise. These processes demand advanced analytical and specialized skills from knowledge workers who have extensive domain experience to their credit. In hindsight, outsourcing of knowledge process functions is more challenging than Business Process Outsourcing. Knowledge professionals in India have extensive knowledge of domains such as:

• Biotechnology
• Education & Training
• Engineering
• Analytics
• Design & Animation
• Research & Development
• Paralegal Content
• Intelligence services

Recently, an increasing number of companies have started outsourcing their high-end knowledge work to India in order to trim costs, benefit from operational efficiencies, get access to a highly talented workforce and improve their quality of service. Several Indian companies are providing a host of services under the KPO umbrella. Some of the services are:

• Market research services

o Significance testing

o Cross tabulation

o Secondary data collection

• Financial research services

o Economic research

o Financial statement analysis

o Insurance research

• Pharmaceutical research services

o Prescription analysis

o Study on medical practitioners

o Brand related studies

• Other KPO solutions

o Trend analysis

o Company profiling reports

o Competitor analysis

So, if you are wondering if India is well equipped to take on the mantle of being the next global Knowledge Process Outsourcing hub, the answer is a resounding yes.

Know more about market research services.

China is a country with great cultural appeal and social concord. It has emerged as one of the most attractive and preferential business locations, largely because of the slowly increasing English-speaking population in the country.

Advantage China

Taking advantage of China’s low cost products and services, an increasing number of Indian outsourcing companies are directly investing in China. Many Indian IT giants such as Wipro have already expanded their business base in China and there is likelihood for more and more companies to follow suit. Since last year (2009), there has been a considerable increase in Indian companies entering China. This reveals the rising interest of Indian companies in doing business in China.

With investments pouring in from the major global players, China has become a booming market. Because of the country’s excellent infrastructure and an overall business-friendly environment, several Indian companies are eying China as to expand their outsourcing business. China is also becoming an eye-catching market for global biotech companies, with minimal set-up costs, a regular flow of low-cost professionals and a stress-free regulatory condition.

Moving to Chengdu?

Chengdu, in the Sichuan province of southwest China, is drawing the attention of Indian companies to set up software development and outsourcing delivery centers. “Chengdu is an excellent gateway to China for Indian companies with its huge talent base, low operating cost, government support and presence of large multinational IT and outsourcing firms,” said Ge Honglin, Chengdu’s Mayor.

International companies such as IBM, Motorola, HP, Microsoft, Nokia and Canon have set up centers in Chengdu.

Enormous Business Potential

China, with its vast talent pool; cheap operating costs, favorable business conditions and presence of big multinationals, has become a profitable destination for most Indian firms. It is a perfect match for businesses looking for international markets to establish development centers and manufacturing hubs. Also, China’s speedy economic progress has created a potential market for professional services and much more. Indian firms are very optimistic about engaging in a business partnership with China.

It will be interesting to see if IT companies in India follow their foreign counterparts to set shop in China.

Know more about professional software development services.

Managing a business is all about economics, effectiveness and efficiency. Outsourcing can be a powerful and profitable strategy for any business as it enables companies to focus on core competencies, while reducing their operational costs significantly. It makes sense for big and small businesses to outsource their routine administrative and maintenance jobs to offshore service providers. Companies should resort to outsourcing if they are facing a human resource, time and money crunch.

Companies can tell it’s time for them to outsource if their high-value, core projects are lagging due to shortage of resources and if they are too busy managing operations and losing focus on their core business. Outsourcing helps companies save on costs such as payroll taxes, insurance and benefits paid to full-time employees. The cost of keeping a company’s workforce working is escalating every year with recruitment costs and employee benefits plans eating into the profit margins.

Look for These Signs

• If you are incurring too many overheads and increased costs in doing non-core tasks, it is a hint that you must hit the outsourcing button.

• If you have just set up a company and do not have enough human resource to execute tasks, you can outsource those tasks to an offshore service provider, who will do the task at a fraction of what you would spend on executing the task in-house.

• You need the expertise of experienced professionals but you cannot afford to hire full time employees. Just the perfect scenario to outsource!

• Time is another crucial sign that prompts you to outsource. If you do not have the time to do certain tasks on your own, just outsource them. There are service providers who do the desired task within a quick turnaround time; sometimes even real time.

You Are Not The Only One…!

Many companies, irrespective of the size and date of establishment, are going the outsourcing way! From small companies to giants such as Microsoft, almost every company has hopped on to the outsourcing bandwagon. These companies are aware that outsourcing can add value to their business. While some companies are outsourcing lower value tasks, some companies are getting crucial jobs outsourced, such as hiring the services of a retired CFO in a remote location.

Outsourcing helps in simplifying operations as the progress in technology allows small businesses to connect with offshore companies easily. Outsourcing gives immediate access to an existing pool of resources, an established infrastructure and personnel with specific skills and domain expertise. Companies need to outsource so that they can invest more money, time and human resources into their activities that can fuel growth.

Look around! Perhaps it’s time to outsource!

Clients make all the difference in any business! Without them, no business can survive. While it is obvious that customer loyalty, customer retention and customer delight help your business to flourish, but without the ‘customer’, these terms make little sense. Similarly, in the outsourcing business, there is a constant need to build a good clientele. While there are several traditional ways of acquiring clients, companies are now resorting to innovative methods to create awareness about their products and services and increase their list of customers / clients.

Did You Say Social Media?

Thus, in order to reach out to potential customers directly, companies are going the social media way! Among the several benefits of social media, outsourcing companies get a platform to express value to customers in a bonafide and direct voice. The social media enables companies to talk about their products and services in a more personal manner. The situation has become so intense that most of the social media websites are flooded with marketers trying to ‘shout out’ their products, services, brand positioning and other messages.

Social media is increasingly becoming a significant part of the overall communication strategy of companies and can be used to transform business opportunities via interactions that allow outsourcing companies to not just reach and connect with potential customers but also be ‘found’ by them. Outsourcing companies are resorting to social media marketing, leveraging online communities to promote their business, products and services. Key terms related to social media marketing are:

•    Social bookmarking
•    Article marketing
•    Blogging and microblogging
•    Video marketing
•    Link building
•    Podcasting
•    Forums
•    RSS feeds

The social media marketing channel enables outsourcing companies to reach their target audience directly and gives them a competitive advantage. Social networks allow users to find and connect with each other based on interests and shared connections. This makes business sense for outsourcing companies to combine the people-centric aspects of social networks with collaborative content and knowledge management.

Key Players

There Internet has a plethora of social networking websites, the popular ones being:

•    Facebook
•    Twitter
•    LinkedIn
•    Orkut

Companies ensure that they have a presence on one of several of such websites. In fact, they also place a link to these websites on their official websites. This has become more of a necessity now, rather than a style statement. A person who likes a particular company’s services can vouch for the same on that particular company’s page on a social networking website. Other people who are connected to that person will come to know about this and will naturally be curious to know more about that particular company’s services. Automatically, a chain starts, which just keeps getting longer on the Internet, across geographical boundaries.

Going social seems to be the new way of life for outsourcing companies!

European companies are embracing outsourcing as never before. However, there are certain European companies that are still reluctant to push the outsourcing button! The need for outsourcing in Europe is steadily growing as it offers enormous financial benefits.

Advantage India

Over the last 2 decades, India has been delivering cost-effective and high quality outsourcing services to companies in Europe. While the preliminary focus was on IT services, today, the most multifarious and analytical services are also offered by India, including product development and engineering, research and development, etc. Its large talent pool, innovation, cost arbitrage, etc. are the key drivers that have allured European companies to outsource to India.

Other outsourcing destinations like Philippines and China are giving India stiff competition to India, but countries like China have drawbacks such as a non-English speaking workforce and lack of adequate technical skill and expertise. According to a recent survey, India is the key destination for global offshoring, followed by China and Brazil.

Nearshore Options

However, we must not rule out the near shore options that European companies have to outsource their requirements. A near-shoring option is more welcome because of cultural proximity, ease of communication and close cultural connection between the Central and Eastern European countries with Western Europe. India is bound to face further competition from Eastern Europe, Mexico and Brazil in the outsourcing domain.

European firms normally favor a near shore alternative, such as Eastern Europe due to geographical proximity and identical time zones. Moreover, there are lesser language barriers with languages such as French and German being commonly spoken. Moreover, Eastern Europe is comparatively a less risky location for investment purposes. Several Continental companies are still taking a cautious approach towards outsourcing to India.

Contradicting Statistics

According to reliable statistics, more than 60% of European companies prefer India as their key outsourcing destination. The study exhibits that India is an undisputed outsourcing hub for the European companies who wish to outsource their complete business processes, while maintaining high levels of quality and standards. International companies such as Siemens have been using Indian outsourced services, leveraging the country’s low-cost workforce for almost a decade. In order to gain more business in Europe, Indian service providers are making strategic investments so as to become more relevant to companies in markets such as Germany and Switzerland.

Only time will tell as to whether European companies will continue outsourcing to India or stop midway to outsource to nearshore locations.

Data protection is a vital aspect of business, especially in the outsourcing industry. Throughout the process of outsourcing, a lot of data – both common and sensitive – is exchanged between a service provider and its client. In a bid to get more finance and legal outsourcing projects, service providers in many countries are requesting their authorities to come up with a law that can assure the safety of data that is transferred by the client to the service provider to work on a project. The absence of a data protection law makes companies more reluctant to outsource their finance operations to offshore companies.

While some countries have existing laws related to data protection, some countries don’t. India, one of the most sought after outsourcing destinations in the world, also has a data protection legislation in place. In countries like Kenya, data protection laws are on the verge of being developed. “A law on data protection has been held back because it was tied to the Freedom of Information Act. We expect both laws to be approved by the Cabinet in their next few meetings,” said Bitange Ndemo, permanent secretary in the Ministry of Information, Kenya.

According to analysts, banks and similar companies fear litigation that could come with disclosure of customer information, when outsourcing. They believe that even with the presence of a robust data protection law it is risky to outsource banking operations which include sensitive data. According to an international Information and Communication Technologies (ICT) consultant, companies in countries like the U.S.A. refrain from outsourcing projects that contain business-critical data as they fear data leakage.

Why Need A Data Protection Law?

• A data protection law not only safeguards data but also helps build a reliable framework for gathering, exchanging and using of sensitive data in business and legal context.

• It is essential to build confidence among foreign partners that the data sent to a service provider is safe and there are adequate suitable legal mechanisms in place in the event of a data violation.

Know more about the security and confidentiality measures at Flatworld Solutions.

In the wake of increasing business costs, are you looking to save valuable time, money and resources? Do you have lots of financial and accounting transactions and no one to take care of them? One sure short method to find a solution is to outsource your finance and accounting operations to an offshore service provider. If you are already contemplating this, you are just about to make the right decision.

According to a new report by Global Industry Analysts, Inc., the global finance and accounting outsourcing (FAO) market is all set to touch the $44.9 billion mark by the year 2015, primarily driven by the pressing need to cut operational costs.

Similarly, a recent report published by the Everest Group, a global consulting and research firm, states that the finance and accounting business in India is growing and stands at US$ 3.7 billion. It is further expected to grow by 20% this year!

Industries engaged in manufacturing, consumer packaged goods, retail, high-tech sectors, telecom and pharmaceuticals have especially benefited from FAO to India and though the recessionary effect did hit the industry in 2009, organic growth through contract extensions picked up significantly and contributed to almost 40% of the Annual Contract Value (ACV) growth in 2009.

The study by Everest Group also highlights that the domestic outsourcing market in Asia Pacific, including Australia and India, witnessed strong activity in 2009. The study only goes to reinforce that FAO can help companies achieve high performance by realizing tangible top and bottom-line benefits from improved finance processes, consistent technology and global delivery capabilities.

Know more about effective finance and accounting outsourcing services.

Companies are increasingly seeking new ways to reduce costs, and everything from legal and HR services to healthcare and R&D are being outsourced. The decision to outsource business processes is a strategic business decision. In the current economic environment, companies are increasingly looking at opportunities to seal outsourcing deals with service providers that provide high-quality services at competitive rates.

While there are several benefits associated with outsourcing, it is interesting to know that outsourcing goals differ from company to company. It is important to follow some general guidelines to ensure that you get the best in your outsourcing endeavours.

Glance Through These Tips to Negotiate a Good Outsourcing Deal

• Keep length and flexibility in mind: A good deal should consist of an initial term of 2-3 years with successive extension and withdrawal options that can be exercised at your discretion, keeping in mind mutual benefits.

• Meaningful Service Level Agreement: An outsourcing deal should be confirmed with a meaningful SLA (Service Level Agreement) that ties into the vendor’s performance and other important clauses.

• Payment options: A good deal should take into account the international implications of payment, including the frequency and mode of payment.

• Key personnel clause should be prominent: Ensure that competent personnel are designated as “Key Personnel” to work on your project. This provides you the control on the quality of the labor working on your project.

• Intellectual property rights: This is especially important when software is being developed. Ensure that the intellectual property rights remain yours and are not misused by the vendor.

• Have a termination of contract clause: This will come in handy should work be completed earlier than planned. Negotiate and ensure that termination of contract is possible without a significant early termination fees.

• Benchmark quality: This allows you to stay competitive in the market by adhering to industry standards. Make sure your vendor is a certified service provider and can conform to established standards.

Also important is to put in place a monitoring system both at your end and the vendor to ensure that you are constantly updated on each and every stage of development of your project. A good monitoring and reporting mechanism  helps in drawing a fine line between the success or failure of your project.

Now that you know what it takes to strike an outsourcing deal, you can go ahead and outsource your requirements to an offshore service provider.