Outsourcing To India: A Complete Guide (Price, Benefits, Facts & IT Talent)

Outsourcing refers to the process of obtaining a few services from a third party outside your organization. An organization, no matter what the size, is never competent enough to have all skill specialization of activities in-house. In order to have competitively improved business performance, an organization hires skilled professionals, remote teams, and freelancers to get tasks accomplished.

Outsourcing by organizations has gained a lot of market presence over the past few decades. Sometimes, the cost of hiring a team and training them for a project/technology is not budget-friendly in-house or is time hassling. With outsourcing being an optimal solution, an enterprise can focus on its core business functionalities and can look forward to expanding in various technology fields by hiring a team of experts. 

Outsourcing in India offers a number of services and so is the best option to get a task done with expertise. Many factors that make outsourcing beneficial to companies are lower budget services, skilled employees on demand, higher performance, timely project delivery, e-commerce solutions, increased reach, new perspectives for projects, load distribution, controlling operational cost, and boosting brand visibility.

IT outsourcing services in India offers myriad opportunities for organizations be it a mid-sized or a global enterprise. Requirements for each organization are different and so depending on the needs, there are various types of outsourcing solutions.

The IT Outsourcing Industry in India

India is known as the outsourcing hub successfully delivering services over decades. Many of the world’s leading companies like IBM, Microsoft, Apple, Dell, CISCO, Ford, Oracle, and American Express have been outsourcing to India for years. Government policies and infrastructure have helped India to enter into business contacts with global enterprises.

IT outsourcing in India accounts for more than US and UK combined statistics. India produces approximately half of the world’s English-speaking graduates completing MBA, Ph.D., IT, and engineering programs. Presence of skilled human resources, well-developed infrastructure, and attractive government policies to name a few aids in business development.

India’s IT sector has been seeing high employment rates, around ten million jobs were offered in 2017 and still continuing. Global giants look for various services for outsourcing to India. Services like web hosting, DB management, disaster recovery, telecommunications, technical support or help desk are outsourced.

Commonly Outsourced Services in India 

The outsourcing market in India has grown exponentially over the past few decades and India has emerged as a global leader in the outsourcing industry. Considering cost effectiveness, favorable government policies, developed infrastructure, and skilled and competent human resource factors attract companies to outsource in India thereby having a win-win situation. The four most commonly outsourced services include: 

Information Technology (IT) is a vast industry delivering IT services, outsourcing, and consulting. According to NASSCOM (National Association of Software and Service Companies), the IT industry’s revenue was approximately US$ 227 billion in the current fiscal year. 

The IT sector is well flourished and India is the fifth IT outsourcing industry across the globe with a competent workforce well-trained in software technology. The most common services in IT outsourcing in India include Web and Mobile application development, Software testing, Cloud Computing, Product development, Blockchain consulting, Digital marketing, MVP, Data Science, Digital Transformation, Custom software development, Security and threat protection, Data center management, Telecommunications, Infrastructure management: hardware, software, network installation, and support.

Despite the competition from other countries, India is still the go-to choice for global players. The presence of a vast pool of technical experts, around 135 million English-speaking workforces (the world’s second-largest), highly competent teams, no infrastructure cost, better budget control, and easy scalability makes India the best choice to enter into an outsourcing contract. 

According to data from the Reserve Bank, it is clearly evident that “India’s IT and IT-enabled services exports have steadily risen to $156.7 billion during FY2021-22”. India offers a lot of talent to industries, as it annually produces around 1.3 million engineering graduates. “That is way more than what comes out of the US, Western Europe, Eastern Europe, and Latin America combined,” says Prasad.

Knowledge Process Outsourcing (KPO)

It relates to knowledge-intensive services that are data-driven requiring both human capital and IT support expertise. This outsourcing to India service requires core business activities of gathering, managing, and analyzing insights to provide meaningful models. This sector of service is aggressively progressing with the presence of technically expert resources.

Back-office Support

These outsourcing services help organizations to focus on their core business activities. These services include managing data and records, customer surveys, billing support, order management, fraud protection, content management, information verification, and many more. Indian outsourcing firms provide full support for such services.

Customer Support

It is a service that provides full support to a customer’s needs. Addressing every customer is vital but answering a number of queries is a tedious task. Outsourcing to India has proven to be a beneficial move as organizations get fully managed support from professionals who are well-trained to handle these support services.

Top IT outsourcing models

The Indian software industry has a developed infrastructure and a pool of specialized experts. When a company decides to outsource its project(s) selecting the right pricing model becomes very crucial as selecting the right provider is essential. Choosing a trustworthy and experienced partner with market exposure is beneficial. 

A company needs to be very clear about the risks and rewards for both parties and at the same time be assured that the solutions provided are well on time. With many outsourcing models present in the market it becomes difficult to choose the most relevant one. In this section, there is an overview of different outsourcing models. Different outsourcing models delivering maximum values for IT outsourced projects are discussed.

1. Pricing-based outsourcing models

India continues to be the world’s unquestioned outsourcing capital. Low cost of labor, wide availability of skilled workforce and top-notch infrastructure are factors behind its popularity. Some payment structures are more advantageous for long-term projects or shifting corporate goals. Other payment models are better suitable for maintenance services or product support.

Variable Rates

When you are outsourcing to India, you have the option of choosing a variable rate pricing structure, which gives you the freedom to pay more for additional or more expensive services or less when the market price drops in addition to a fixed basic fee. If you want to work with an Indian outsourcing company that you have never worked with before, you might choose this payment structure. The cost of extra services will only be slightly higher if you are pleased with the caliber of the work.

Fixed Rates

You will have to pay the Indian service provider a certain amount throughout the duration of the outsourcing contract if you choose the fixed-rate pricing model. Since they can anticipate the cost of outsourcing, many businesses favor this pricing structure over others. Even though the market price may decline, this pricing model might not be the greatest for a long-term outsourcing contract because you might not be able to cut costs. For one-time or transient outsourcing tasks, this pricing structure would be suitable.

Pay per Unit

According to this pricing model, an Indian vendor will provide you with a service at a unit-based fixed charge, and the amount you pay will depend on how many services you use. When you contract out maintenance work to India, for instance, you simply have to pay for the number of units you utilize to receive the service.

Performance Based

The Indian outsourcing service providers will be paid according to how well they perform under this price system. You must offer incentives to your vendor if you are pleased with the service they supplied. A penalty will be paid by the vendor if you are dissatisfied with the services. You may be confident in the quality of the work by choosing this pricing model because your vendor is aware that they will receive incentives depending on performance.

Cost Plus Profit

You can choose this payment structure if your business’s objectives are well-defined and your outsourcing needs are constant. You must give the actual cost to the company that offers you IT outsourcing in India in addition to a set percentage when using the cost-plus profit pricing model. The absence of flexibility to incorporate shifting business objectives or technological advancements is the only negative of this pricing strategy.

Packaged Pricing Model

When IT services are outsourced, this kind of payment arrangement is typically chosen. You will pay a set price as an outsourcing in India client for two or more IT services or products that are combined. With this pricing structure, you can get two or more outsourced services for less money. However, you must be careful not to combine short-term services with IT product support because you will be responsible for the cost of the services even if you do not use them.

Profit and Risk Sharing

With this cost structure, the outsourcing project would be equally shared by you and your IT outsourcing in India. You and your outsourced company will be able to share in the profits once the project’s commercial goals are achieved. Along with that, the loss will also be distributed equally. If you are confident in the vendor’s ability, you can choose this model.

2. Relationship-based IT outsourcing models:

This outsourcing model is based on both responsibility and ownership of the client and their third-party provider and how well principles are held during the tenure of the project. Different relationship-based outsourcing to India models are discussed to provide a clear view.

Dedicated Team Model

This model provides compensation for the lack of an in-house team. A dedicated well trained and reliable team is built by the outsourcing vendor according to the proposed client’s requirements reporting directly to the client or project manager. The team’s fee comprises the monthly salary of each member and the vendor’s profit margin.

The dedicated team works closely with the in-house team in developing complex projects and precisely works on changing requirements in different stages of project development. The team size is adjustable and transparency is maintained throughout the project. This model is best suited for mid to long-term projects. The company retains control over the entire project’s development process and deliverables are shared by both parties.

Staff Augmentation Model

This model promotes extending a team of software engineer’s temporarily or permanently with the in-house team to complete the project(s) with their specialized expertise either throughout the project or at specific phases. It is a flexible contracting strategy to fill the skill gap and promote the in-house team’s capability. IT staff augmentation brings in a great ease to the company as the hired staff works as an extension to meet project requirements and clients keeping complete control over the outcomes. 

The hired team can be scaled up or scaled down based on requirements. The team/specialist is hired on a pre-decided fee for the duration of the project or on a needed basis. This approach is best suited for short-term projects.

Project-Based Model

This model is the traditional method of outsourcing in India for software development projects. In this model, the organization outsources its complete project to a third-party vendor. The organization explains all the details and requirements of the project to the vendor and the vendor now is completely responsible for delivering the project by developing the required skilled expert team.

The vendor in this scenario holds the maximum part of the project and has full responsibility from the start to the end of the project. The project manager assigned by the vendor holds smooth communication with the organization. This model has the least time-consuming process from the client’s side out of all the mentioned but also the organization has the least control over the project as the vendor holds the project completely.

3. Location-based outsourcing models

In location-based outsourcing, the deciding factor is how willing in terms of distance is the organization to deploy services. Based on the different requirements of each organization, location-based outsourcing is classified as:

Onshore outsourcing

It is also called domestic or local outsourcing where resources are hired from the same country but outside the organization. There is not much difference in the time zones so both teams can communicate easily without any language barrier or cultural difference. It may also include on-site staffing where the employee(s) can come to the company’s office and work. 

This model is beneficial for sensitive projects that require close interaction with internal staff/management as the provider is located in-house one can easily communicate with no cultural or language barrier and receive timely updates. High quality of work is seen in this model as any change or mistake is communicated well in time and issue(s) are resolved faster. 

A dedicated manager to maintain relations with the provider helps in easy communication to reduce any unwanted risk(s). So better and improved results with a faster turnaround are obtained providing easy troubleshooting and increased control.

Offshore outsourcing

This model refers to transferring the workload to a country that is geographically far from the business location preferably in a different time zone. Depending on the country and the model the provider chooses offshore outsourcing can get the project(s) completed at reduced costs and with improved efficiency. 

When an outsourcing company collaborates with an efficient service provider, a number of benefits in terms of in-time project delivery, smooth workflow, increased efficiency, and access to talented and expert resources are possible. 

Generally, the main reason for offshore software development is to get lower budget requirements fulfilled as one can scale up or scale down resources with great flexibility. This model helps the outsourcing company to get hands-on specialists in technologies that the in-house company may be lacking.

Nearshore outsourcing

This involves contracting an agency that is geographically adjacent to the parent company preferably within the same time zone making communication between the two parties easier. An increasing trend of small enterprises preferring nearshore outsourcing post-pandemic can be seen. 

This outsourcing model is a bit more cost-effective than onshore outsourcing as the overheads like traveling costs are minimal, and the language or cultural differences are very minimal as the chosen service provider is in close proximity to the organization. The nearshore outsourcing team can be available on-site if and when required. The expense of developing infrastructure for an in-house team is not bothered as the service provider already has a developed infrastructure.

4. Cloud Computing based outsourcing

This type of outsourcing involves hiring a third-party provider to deliver services online. It is basically a subscription-based service offering on-demand access to a shared pool of computing resources like servers, networks, storage, etc. by the provider over the internet. The biggest benefit of cloud outsourcing is that it is released with minimum effort. These services are without a single dedicated data center providing the client with flexibility and ease in management. There are four service models as stated:

Software as a Service (SaaS) model provides software applications to the client over the internet.

Platform as a Service (PaaS) model provides a platform that is owned by the provider to clients to develop, test and manage their applications.

Infrastructure as a Service (IaaS) model is based on the usage basis. This model provides virtualized compute resources like servers, networks, and storage over the internet.

Desktop as a Service (DaaS) model provides virtual desktops to clients and they can access them from anywhere via the Internet.

In-House vs. Outsourcing to India

Depending on business priorities, you may prefer outsourcing to India or in-house development because each has advantages and disadvantages. The greatest option is outsourcing if you want to concentrate solely on your business and do not want to deal with the inconvenience of hiring or administrative tasks. The list of factors below demonstrates when outsourcing is the appropriate course of action.

Quality of the Product

Indian software development businesses conduct numerous levels of quality testing to guarantee the high caliber of the final product. However, it is sometimes impossible to assemble a team of so many people from within an organization. 

These outsourcing partners also employ a number of developers who can discuss with one another and share knowledge if they run into difficulties. Relying on an external development team is preferable if the quality is important to you.

Time to Market

If you are on a tight schedule and need to get your product to market quickly, outsourcing services in India is a preferable choice. You can avoid hiring developers, dealing with the onboarding process, and helping them comprehend your project by doing so.

When you outsource a project, you gain access to team members, including team leads, business managers, scrum masters, and others who guarantee the project’s swift development and understanding.

Cost of IT Outsourcing

When deciding between in-house and outsourced development, cost shouldn’t be the deciding factor, although outsourcing development would be better if you have a limited budget. When there are no constant requirements and there is a lot of downtime in the project cycle, outsourcing development can be very cost-effective. With outsourcing in India, you can either pay per hour or hire dedicated developers as needed.

Availability and Skills

There are not many developers who are available that have required the skills in the area. Experience is also one of the most crucial factors when you hire someone for your project.

Through outsourcing, one has access to a global talent pool, which is not available with an internal workforce. Besides, organizations that are outsourcing software development to India are more likely to have a variety of project experiences.

Scaling flexibility

It is time-consuming and difficult to hire and fire people. It can be difficult to find some expertise locally. Finding developers who are keen to work on short-term projects might sometimes be challenging.

The contract can be changed at any time when outsourcing to a software development business, much like an on-demand service. One of the main benefits of outsourcing to India is scaling flexibility.

Why should companies outsource to India?

Outsourcing to India has shown to be very advantageous and competitive for businesses as globalization has progressed. This actually gives the answer to why outsource to India. Besides, without a question, one of the top locations for software development outsourcing in India. India got to where it is today because of the knowledgeable software developers, imaginative designers, and expert advisors working together on a platform respected by administrative support.

Get more done with less

India continues to be the leading outsourcing destination even though the cost element is very important. This is mainly due to the continuously good quality offered by Indian outsourcing companies. The National Outsourcing Association (NOA), in a presentation at its annual offshore outsourcing conference, discussed the widespread practice among foreign businesses choosing to outsource to India or India as their preferred outsourcing location.

The demand to create enormous amounts of work and increase income with their current team is almost constant in the company. You can increase the production of each employee by IT outsourcing services in India while using your present workforce to handle the outsourced team and projects. The productivity of your business can only be significantly increased by outsourcing in India.

Access to skilled, educated professionals

When it comes to having a large pool of talented and skilled people resources, India continues to be unrivaled. There are about 1.2 billion people living there, and every year, about 3.1 million graduates join the labor force. Additionally, India is the largest English-speaking country in the world—larger than the US and the UK put together. Companies looking to outsource are drawn to the large numbers as well as the talent’s quality.

Working with highly educated individuals, many of whom have qualifications from some of the best colleges in the world, is a benefit of outsourcing in India. You should not have fear of outsourcing services in India, as Indian experts do the work perfectly to maintain the company standards.

Prioritize your main business competencies

As your company expands, you will need to keep up your existing growth rate while supporting your expanding customer base or investigating and testing new goods. Your attention may be diverted from your primary business operations if you handle everything in-house.

Also Read: In-house vs Nearshore Software Development

When you are outsourcing to India, you can, however, assign non-core tasks while keeping control of the operations that make your company successful. Outsourcing in India means concentrating on research and new products to keep up with the expanding client base. India is a flexible outsourcing location where you can quickly discover a service provider for any company activity you would like to outsource, including marketing, research, and customer care.

Scaling up of the business

You might not always have the optimal number of employees with the necessary abilities for your current job because business is usually erratic with its own peak and slack periods. By providing you with access to qualified individuals as needed, outsourcing in India can assist you to manage such untenable business scenarios. Outsourcing can give your business some degree of scalability, whether you need fewer or more resources.

Superior flexibility in pricing

India continues to be a major outsourcing supplier for a number of reasons, but most importantly because businesses can save a lot of money there. This is primarily due to the significant difference in personnel expenses between India and developed nations. The American workforce is pricey because it costs more to live there than in other nations. As the employer, you are responsible for covering each employee’s salary as well as taxes, computers, cubicles, health insurance, and liability insurance.

India is a cost-effective country to outsource to because labor costs are so low there. While the hourly rate of an experienced developer in India can be negotiated down to as low as $15, the range for a talented developer in the US can be anywhere from $50 to $80. When your organization can’t afford to pay hefty salaries, India’s flexible pricing allows you to be more creative with how you manage your budget.

Decide on the optimum staffing levels

Maintaining the right number of employees to satisfy corporate needs may prove to be a difficult task. When business activity is at its peak, having fewer employees increases the likelihood that you will fall short of expectations. On the other hand, if you hire too many people, you run the danger of losing competent workers to boredom or a lack of demanding tasks.

By offering you the freedom to choose the ideal staffing levels, IT outsourcing in India might assist you in resolving this issue. Most of the time, you can recruit a core team to handle your business’s needs. You can maintain expanding your bandwidth by outsourcing in India when your business activity increases in response to seasonal or other demands. Moreover, you will be able to maintain a constant utilization rate for your full-time staff all through the year.

Top-notch infrastructure and technology

All major towns and cities in contemporary India have access to cutting-edge cellular, ISP, and telecom networks. The best and latest software technology is provided to clients, offering tailored solutions for several applications like e-commerce, operational processes re-engineering, system transition, legacy operation and maintenance, system integration, and many more. 

By offering high-speed bandwidth across fibre optic networks, underwater cables, and satellite connectivity, outsourcing organizations also maintain constant communication channels with their clients.

Indian IT Policies: Stable and Attractive

The Indian outsourcing sector is supported by a stable government that is supportive of IT, whose policies on economics, GDP development, tax, power, telecom, industrial parks, and special zones have helped to improve communications and infrastructure.

One of India’s top 5 key industries is IT, and the administration has developed laws to make the most of IT outsourcing to India. By establishing the Information Technology Act, which recognizes electronic contracts, outlaws cybercrime, and encourages the e-filing of documents, the government has shown support for the IT business by giving a variety of tax-related and other incentives.

Fastest Time-to-Market

The benefits of time zone differences allow Indian outsourcing companies to offer the shortest time-to-market. Due to the twelve-hour time lag between India and the USA, companies have many opportunities to finish projects faster than anticipated, resulting in more production, improved efficiency, and more time to devote to other important duties.

India is the best choice for clients that want to outsource numerous service-related alternatives, including 24 * 7 customer assistance and help desk services, due to the time difference.

Efficient Communication

India is the second-largest English-speaking country in the world, so if you want to outsource web development or any other project there but are worried about how you will properly interact with the offshore development team, consider this. India’s English-speaking population makes it very easy to communicate with remote developers there. 

Despite the fact that there are still linguistic and cultural barriers, Indian specialists speak English better than professionals in other top outsourcing locations. There are numerous applications, such as Slack, Skype, etc., that make it easier to communicate with teams working remotely.

Big Organizations Outsourcing to India

An increasing number of businesses are now looking to outsource their operations to India. In order to reduce operating costs, more businesses are turning to outsource companies as they search for a more affordable and efficient way to manage their operations.

Due to low pricing, round-the-clock service, a highly skilled workforce, a large talent pool, and ongoing government support, India has become one of the top outsourcing locations. Many studies show that the majority of Western businesses already outsource to India.

According to a recent analysis by Grand View Research, Inc., the market for outsourcing IT services is predicted to reach 937.6 USD billion by 2027, reflecting a CAGR of 7.7%. Over the projection period, the market is expected to be driven by the rising desire to lower operational costs and the dearth of in-house I.T. engineering skills. Some of the factors driving these companies to outsource are cost reduction and business continuity

To both small and large firms, outsourcing has, however, offered advantages as well as disadvantages. There are numerous businesses that can benefit from what these companies did correctly and what did go wrong with their management.

The leading businesses that are IT outsourcing to India and enjoy the perks are listed below.

Organizations that use India for outsourcing

1. Microsoft
2. American Express
3. Dell
4. Hewlett Packard (HP)
5. CISCO
6. Ford Motors
7. Amazon
8. Google
9. IBM
10. AT&T

Quick Statistics of Outsourcing to India

• Around the world, 78% of business owners are happy with their outsourcing partner, as per the Deloitte 2016 Global Outsourcing Survey.

• According to Gartner, over 80% of logistics executives intended to raise their outsourcing spending by over 5% by 2020. This is due in part to the fact that they were able to fulfill or surpass their end-to-end (E2E) supply chain and overall company objectives thanks to the outsourcing of their logistics.

• In contrast, The Everest Group observed a 9–11% growth in the life and pension insurance BPO sector due to the expansion of end-to-end third-party administration. Since 2014, the market has consistently grown by 9–10% each year.

• As per a Report, businesses will keep using cloud solutions for IT outsourcing, which are anticipated to reach “a monumental 760 billion USD” by 2027.

According to studies conducted in 2021, skilled labor, a large pool of accessible workers, and a favorable financial climate all contribute to India being the most popular outsourcing location, with scores of 2.83 and 2.18 for both the availability of staff and the financial environment, respectively. India received a score of 0.91 while the US received a 1.15 in the digital resonance test.

What is the best way to choose an outsourcing provider in India?

There are many factors to consider and decisions to be made in order to run a successful business. Selecting the best outsourced software development business may prove to be challenging. Even if an outsourcing company may offer good service, it is crucial to independently verify whether the service is trustworthy or not.

If you need help choosing the best IT outsourcing services in India, it is important to take a look at the different offerings offered by various companies.

Consider the Product

An outsourcing company can be distinguished from a substandard one by the caliber of the product that is delivered. Using an outsourcing company does not mean you will always be open to working with them. It could be possible that you will determine that building your own team is the best option.

Defining Outsourcing Objectives

Prior to signing a contract with one of the outsourcing providers, a firm can draw out its outsourcing goals. It is a proven fact that appropriate goals are kind of reliable tasks. Unrealistic goals like wanting to increase revenues or create a new product are unlikely to produce desired outcomes.

Ensures Effective Communication

Choosing the best outsourcing partner requires careful evaluation of the daily operations and logistics. This factor is important when deciding whether to use an offshore or nearshore solution. The diverse range of messaging and file-sharing software suites, including Slack and G Suite, attest to the fact that the modern office is built on cooperation and communication. It is important to take into account that you are dealing with a nearshore workforce rather than one made up entirely of offshore workers.

Discuss how they perform

An outsourcing business should be able to meet your needs using only their set of abilities, have a strategy for spending your money wisely without incurring extra costs, and produce the finished product by the deadline. Along with being able to write code of a decent caliber, a knowledgeable team must comprehend business requirements.

Lean Startup is an approach to business that focuses on how you produce your end product rather than how it looks or feels. The main guideline of the method is to focus on strengthening your value proposition, rather than just focusing on what you look like as a finished product.

How you interact with them

It is essential to look into the outsourcing company’s product management practices. The specific outsource in India company joins the team whenever the business subsumes it for the job of product development. The feature allows the specific outsourcing business all the control that is necessary, allowing it to monitor the process’ progress.

Decide on the payment type and match the price

Cost of outsourced services should be a key consideration when choosing an outsourcing company. Some corporations conceal unqualified and unskilled labor behind low costs for their services. Long-term costs for maintenance and repairs may be higher for these kinds of businesses.

Choose a fixed quote if you decide to sign an agreement with a specific outsourcing provider. According to your specifications, some outsourcing companies can find it challenging to produce an acceptable bid. In such cases, pick the appropriate amount of time and materials to make up for the labor.

Comparative Analysis

It is essential to concentrate on the performance and effectiveness of the outsourcing company. It is true that professional and well-known software consultancy may ultimately prove useful for you. When choosing an outsourcing company, it is important to read online client reviews. Ask about availability as well as the requirements for delivering the job.

How Do You Start Outsourcing to India?

Did you ever consider that there are numerous advantages of outsourcing non-core business operations to India? Due to the additional opportunities it gives businesses to save costs, boost revenues, and standardize services, outsourcing has only grown in popularity over time. Outsourcing offers benefits that your business cannot afford to ignore, from low labor costs to higher productivity and access to specialist talents. If you outsource to India, use these guidelines to achieve the greatest results:

Arrange a team meeting

Assemble an internal committee to investigate whether outsourcing is a viable option for your organization. You can decide if IT outsourcing to India will boost your profitability once the research is complete. Additionally, you will be able to decide whether your business can balance the costs and work involved in transitioning to outsourcing.

List the products and services that will be outsourced

Make a list of and choose the parts of your company’s operations that can be delegated to India. Analyze the prices and labor requirements for the planning, instruction, and implementation stages of outsourcing to India.

Engage an acquisition consultant

Hire a skilled acquisition/merger development consultant or hire Indian developers to take care of the technical aspects of outsourcing to India. By conducting an online search or asking colleagues or business people in your field, you can find acquisition/merger development experts.

Make a business plan

Update the business strategy for your organization. As outsourcing operations are transferred to India, develop a long-term as well as a short-term strategy for success. To ensure a smooth transition to outsourcing, don’t forget to identify the requirements.

Make a complete list

Make a list of the tools and acquisition processes needed to completely outsource your business activities to India.

Analyze potential vendors

An RFP (Request for Proposal) should be written and sent to possible Indian outsourcing companies that can help your business with business functions that it cannot do internally.

• Assign a team member or team members to oversee the RFP process with prospective Indian outsourcing companies.
• Select the most suitable Indian vendor after carefully considering all of the proposals you have received.
• Request recommendations from the Indian outsourcing service providers you are interested in working with.

Obtain and review crucial information

Gather all necessary data, including case studies, success stories, and legal requirements. Your internal staff should review this data.

• Using all the data you have acquired, create a SWOT analysis (successes, weaknesses, opportunities, and threats). Invite your team to a meeting and develop a strategy to deal with each component.
• Look for and speak with potential Indian suppliers who can suit the specific needs of your organization.

Be prepared for setbacks

Be ready for any obstacles your business may face when outsourcing to India. It is always best to be prepared because issues like linguistic or cultural barriers might occur in any outsourcing project and obstruct the outsourced process.

In the unlikely event that there are issues with project managers, or vendors, or a deadline is missed, prepare the full outsourcing transition and include a backup plan.

Initiating the outsourcing process

According to your plans, you can begin the process of outsourcing to India.

Offer Training

Prepare your team in India by providing them with sufficient knowledge of your business requirements and corporate practices.

• To ensure that corporate objectives and performance standards are in line with business activities abroad, implement an SLA (service level agreement) with your outsourced team in India.
• Use defined procedures to track service levels, such as call recording telephony systems or web-based reporting tools that let supervisors monitor employee performance.

Maintain consistent communication

Through regular phone or web conferencing meetings, make sure your team in India is kept informed of the status of your business and other crucial information. Throughout the outsourcing project, do not forget to stay in touch with the Indian team.

Outsourcing to India: Benefits and Drawbacks

Outsourcing to India can provide a lot of advantages, including lower costs, increased efficiency, and a stronger competitive edge. On the other side, losing control over the outsourced operation is frequently a possible commercial risk. Before agreeing to outsource any tasks or business processes, you should thoroughly weigh the benefits and drawbacks of outsourcing.

Major Benefits of Outsourcing

The relocation of some employment to less expensive nations will enable businesses to save significantly on overhead costs and obtain top-notch services, which has a good effect on productivity. However, when new jobs are produced, host nations might benefit from fresh sources of revenue. Outsourcing has several major benefits, some of which are:

Increased Business Growth

Outsourcing in India is a win-win situation since it allows outsourcing companies to access high-quality services at reasonable prices while hosting companies benefit from an increase in revenue. So, it is reasonable to anticipate that the industry will experience rapid expansion as more and more businesses look to outsource their business activities to a third-party service provider. This elevated need for service providers also suggests that the outsourcing market is seeing an elevated need for service providers.

Lessened Risks

The majority of US and UK businesses choose to outsource their work to nations like India because of the latter’s skilled labor force and strict data security laws. Companies that outsource in India greatly lower their chance of receiving subpar services and data breaches. After operations are outsourced, service providers make sure that projects are finished quickly and without any improper handling of sensitive information.

Higher Business Efficiency

Companies are given more time to focus on their core capabilities when they are outsourcing in India their business operations. The ability to obtain higher services, lower overhead costs, and concentrate on growing their organization aids in enhancing their total business efficiency.

Effective Resource Utilization

IT Outsourcing to India is a great way to access a vast global talent pool. This is due to the fact that organizations can outsource to a service provider and have access to qualified personnel, cutting-edge technologies, and cutting-edge infrastructure for a fraction of the expense of maintaining these resources internally.

Access to a Wide Range of Services

Businesses usually offer a wide variety of services to their customers. However, it would be very expensive to do all of this internally. Other risks include the need to constantly scale up or down particular seasonal projects. The shift in scalability may necessitate large investments. 

There are numerous offshore businesses today that offer a variety of services with the capability of simple scaling. Businesses can get these services through outsourcing and save the trouble of keeping an in-house workforce for all of their services. Additionally, service providers give outsourcing businesses the freedom to select only the services that perfectly meet their needs.

Access to a vast Talent Pool

Due to the wide range of backgrounds represented in the population, India has an incredibly abundant supply of labor. There are many people with extraordinary skills available, including engineers, scientists, economists, MBAs, journalists, virtual assistants, and many others. 

Pharmacy, Medicine, Biotechnology, Education & Training, Law, Analytics, Engineering, Design & Animation, Research & Development, Paralegal, and Intelligence are just a few of the industries where you can find talented people. India appeared to fill the gap in other nations where there was a lack of highly qualified labor.

Modern infrastructure and technology

Indian organizations place a strong emphasis on the installation of cutting-edge infrastructure and technologies. A key component of their plan is also educating the employees about the newest technologies.

To make sure that staff members are always performing at the highest level, they regularly organize training sessions. This enables Indian businesses to seamlessly complete important projects and meet the exact expectations of international clients.

E-commerce Solutions

India has recently become noticeably more dominant in a number of sectors, including e-commerce. Amazon, the founder of eCommerce, attests to this by establishing a offshore development center in Indian cities like Pune, Bangalore, Hyderabad, and Chennai.

Through outsourcing their customer service, e-commerce businesses have over the years concentrated on becoming more competitive than before. For maximal output, they have resorted to technology for this purpose. This is attested to by the integration of logistics and customer service.

Effective Communication

Effective communication is typically needed in outsourcing to guarantee that ideas are transmitted clearly. In order to increase productivity and efficiency, Indian outsourcing companies provide their clients with a variety of communication options, including email, phone conversations, and even video calls.

Consistent Democracy

One of the biggest democracies with a stable central government in India. Since India’s independence, the government has placed a great premium on creating a highly effective IT sector. As a result, the Indian workforce is well-equipped with a highly modern, regulated, and technologically advanced IT sector.

Outsourcing has a few drawbacks

Businesses have an opportunity to think about their options after learning about the drawbacks of outsourcing. Therefore, it is crucial that organizations consider the cons of outsourcing before making the decision to do so for their internal corporate business processes:

Growing Competition

Outsourcing causes the supply chain to become disjointed and fragmented due to the large number of service providers, which opens the door for new rivals in this market. Additionally, outsourcing fosters a culture of corporate comfort and shatters the company’s relationships with its clients, employees, and local communities.

Impacts on Employee Loyalty

An employee may become disillusioned and lose faith in the company if he finds that his job could be outsourced to a third-party service provider at any time. Today, outsourcing extends beyond low-skilled employment. Even managerial-level personnel experience job instability as a result of the outsourcing of intellectual and administrative tasks.

Domestic Workforce Loses Jobs

The loss of jobs for domestic labor is one of the key consequences of outsourcing. The issue of domestic workers in outsourcing firms losing their jobs when those firms outsource their services to foreign countries has long been a subject of discussion. Offshoring, unfortunately, has a detrimental influence on the economy of the nation because service providers will receive payments from outsourcing companies.

Undesirable outcomes

Unwanted outcomes are one of outsourcing’s biggest negatives. This also holds true when a company contracts with a third-party vendor to produce a product in large quantities. A separate dealer should take over the production process if the finished products don’t meet quality standards.

Reduced Control

Additionally, there is substantially less management control while outsourcing. Comparing managing the outsourcing firm to managing your own employees, the management of the outsourced company may be more challenging. It’s also possible that outsourcing will cost more money. Outsourcing a procedure is frequently more expensive than keeping it in-house.

Uncertainty

Furthermore, when an outsourced company goes out of business, this is one of the major problems. Simply put, your business must quickly switch to a new provider or bring the process back in-house if your outsourcing provider goes out of business or declares bankruptcy.

Safety

The biggest issues with outsourcing include safety and confidentiality. As a result, the outsourcing company will be aware of your company’s business processes, such as payroll, as well as personal information, such as salary. Therefore, be sure to pay close attention to the kind of information that you provide them access to.

Poor management risk

Time is lost on projects while managing. Working with clients and communicating their needs to Indian developers takes up valuable time. Even the cost of lodging must be taken into account, along with travel.

Differences in communication, culture, and society

The social and cultural customs of the vendor must be accommodated by your business. Businesses and service providers have trouble communicating with one another due to different time zones, local languages, and accents.

Piracy

Sometimes, you might get a duplicate code. There are instances where duplicated projects are sold again. The safety of the code and its prohibition on sale are difficult to ensure. There are serious copyright and licensing issues here. However, if you and the contractor sign an NDA, you can avoid this issue.

Challenges with outsourcing IT in India and their solutions

Successful companies make the decision to outsource their non-core business processes by enlisting the help of seasoned outside service providers. Although there are some drawbacks to the entire outsourcing procedure, the potential fixes are listed below, allowing you to make use of its advantages. Let’s begin.

Control Issues

The loss of control over a project that has been outsourced is one of the most frequent outsourcing issues that businesses encounter in the beginning. Each business must go past this stage because its internal team handled the prior part of the project. The vendor’s location and methods of communication will determine how much control you have over the project that was outsourced. As a result of their lack of knowledge of your most recent needs, poorly managed service providers may compromise the quality of your project’s delivery.

Solution

You should thoroughly investigate the tracking strategy that will be used throughout the process before picking an outsourcing partner for your business. You can also examine the company’s experience in dealing with clients. Set meeting deadlines, monitor KPIs and other indicators, and note the point of contact in addition to those other things.

Communication Challenges

Companies that are new to outsourcing find it challenging to maintain effective contact with their outsourced partner. There is a good risk that you will experience communication problems with your outsourcing partner if there are linguistic and cultural obstacles. One of the most usual outsourcing issues businesses have is a communication barrier, which can occasionally result in a drop in project delivery quality.

Solution

Setting appropriate business hours for communication can help close the communication gap. A uniform communication format may be established with the help of efficient project management systems, and it can be strengthened with the help of appropriate escalation procedures.

Hidden and Unexpected Costs

Gaining a competitive edge over maintaining an internal workforce to handle non-core company tasks is the major goal of outsourcing. Always check your internal team’s cost projection with the vendor’s price before selecting one. Additional costs that may not have been earlier considered include redeployment, debugging, software upgrades, etc. All of these factors can increase your initial budget, which may become problematic later.

Solution

Communication with the provider and requesting a clear cost estimate while closing the agreement are the only ways to reduce outsourcing costs. To ensure that the service provider can offer you an accurate cost estimate for the outsourcing process, you must specify the needs of the project in detail.

Choosing a Reliable Service Provider

It is crucial for businesses to have a trustworthy outsourcing partner if they want to successfully grow in international markets. Finding the ideal partner to meet your outsourcing needs might be difficult at times. A lack of sufficient due diligence on the providers is one of the typical outsourcing issues that many businesses encounter. As a result, the project you outsourced can end up being of poorer quality.

Solution

When choosing the best vendor, there are a few factors you should take into account, including the firm’s expertise, the number of projects and clients it has worked with, the size of an average project, the company’s ranking and reviews, its access to the most recent technology, etc. But the list differs from business to business. Before choosing your outsourcing partner, prepare your questions and get clarification.

Privacy and Security Issues

By outsourcing to India, you provide your outsourcing partner access to some or all of your company’s assets. The security procedures, data protection policies, privacy concerns, and intellectual property issues involving proprietary information, patents, and copyrights must all be examined for this reason. You should always select businesses that adhere to a stringent security protocol because there is always a risk that the provider may disclose your critical information.

Solution

Making a contract with a non-disclosure contract and service level agreement, as well as checking the organization’s security procedures and data protection system, are the only methods for preventing these kinds of outsourcing issues.

Cultural and Linguistic Diversity

The most common outsourcing issues that most businesses encounter when they consider outsourcing are cultural and linguistic difficulties. Due to linguistic and cultural obstacles, businesses struggle to provide their outsourced projects the attention and creativity they deserve. Cultural and linguistic disparities can result from a lack of knowledge and communication and have a big consequence on the outsourcing process.

Solution

Only when there is open interaction between the two businesses is it possible to resolve a disagreement in corporate culture. In order for you to communicate effectively, confirm that the staff at the company speaks English or your other chosen language.

Inexperience with outsourcing

Smaller businesses that are just beginning their outsourcing journey may find the process to be intimidating when compared to a more seasoned business. Knowing the best practices, expenses, typical concepts, and processes will help you when explaining your ideas to another business. One of the frequent outsourcing issues that, if addressed correctly, can be resolved is a lack of experience.

Solution

To identify the bottlenecks and reduce the potential hazards if you lack outsourcing experience, look for an experienced outsourcing partner. Your expectations will be matched, and those providers will assist you in developing the project requirements and the entire process.

Making Decisions

If the location of the buck stops is not established upfront, the issue keeps shifting from one table to another. Internal employees frequently assume that they are entitled to more decision-making power than service providers. If, as per the contract, an existing employee interferes with the authorized rights, the disagreement that was never a fire before erupts into a firestorm and jeopardizes the business’s intentions. If handled improperly from the beginning, rights and power may turn into one of outsourcing’s largest problems.

Solution

When a project begins without explicitly specifying the roles that each team will play in its implementation, this difficulty typically arises. Make sure that each team member’s function is well-defined in order to eliminate conflict. Create groups, at the very least, to group together persons who play similar roles. The decision-making in those groups should subsequently be delegated to team leaders.

If the contracted company will have decision-making authority, the contract should specify what decisions it will allow it to make and what decisions it will require internal team agreement for. However, a lot of this will rely on the outsourcing strategy you choose.

Differences in Time Zones

When a company chooses to outsource to another country, one of the main issues they encounter is time zone variations. When your outsourcing partner is located in a different nation, there will be a time zone difference. Even when your provider does not operate around the clock, you can still get in touch with someone who can talk to you when it suits you most. It is easier to select the ideal outsourcing vendor when you have a clear visual of the time zones.

Solution

Only through regular communication will time zone discrepancies with your outsourced vendor be reduced. Decide on a time when both parties can update each other on the status of the project. This will keep everyone informed about its progress. If not, choose a provider that is available around the clock so that you can communicate more effectively and time zone differences will not affect you as much.

Mismatch between Expectation and Goal

It is very usual to have expectations and goals that are not aligned if your outsourcing needs are not well defined. Setting goals is crucial before beginning the outsourcing process and choosing an outsourcing vendor. To meet your objectives and establish goals, it’s crucial to keep the contract consistent, open, and genuine.

Solution

Setting correct goals for your outsourcing process and preventing goal and expectation mismatches can be done most effectively through effective communication. To ensure that your provider and you are both on the same page, always double-check the project outsourced requirements and communicate them.

Facts about outsourcing to India

While the revenue from Global IT Outsourcing has historically been unpredictable, it has recently surpassed 92.5 billion dollars, suggesting that the sector may be stabilizing. The following are some fascinating facts regarding the outsourcing market in India:

According to 69% of ITDMs, their company has expedited its cloud migration over the previous 12 months.

Cloud migration services from IT Outsourcing in India help you move your applications, infrastructure, and other crucial business activities to the cloud. Determining if a public, private, or hybrid strategy to cloud migration best meets your needs is also crucial. The cloud migration and development services ensure that application speeds are consistently maintained.

Addressing concerns of data privacy and security

Data privacy and security issues are frequently cited by pro-outsourcing lobbyists in the UK and US. India is adamantly committed to keeping up its reputation as a secure outsourcing location. Legislation that requires businesses to protect client financial and medical data is putting more pressure on businesses. Indian organizations have taken a very proactive approach to regulating data security in Indian outsourcing companies.

Outsourcing to India affects American workers.

Job outsourcing is a widespread phenomenon in the US that ignites intense economic debate. On the one hand, this practice cuts expenses for American businesses and enables them to offer cheaply priced services and products. However, it has also harmed employment, especially in the hardest-hit industries: 

•     IT jobs
•     Call centers
•     Human resources
•     Manufacturing

American businesses outsource to India since the country’s workforce already speaks English. In addition, its legal system is comparable to that of the US and its institutions are among the top 20% in the world.

With the help of Indian IT talent, ride the digital transformation wave and drive technological growth.

One of the greatest strategic approaches to managing duties that are typically managed by internal people is to outsource IT-related business processes. Indian IT companies have been thriving at providing unrivaled services, whether it is product engineering, creating digital experiences or bootstrapping their way to success. India is a top country to choose from if you also want to outsource your IT operations. There are a large number of reputable IT companies that provide outsourcing services in India.

According to a Korn Ferry research, India will overtake the US as the world’s tech power by 2030. It implies that even though there would be a global shortage of talented IT workers, India will take the lead with more than 1 million extra competent individuals.

Between 70% and 80% of finished products are outsourced by manufacturers.

The reason behind migrating to a contract manufacturing agreement is cost reduction. When compared to U.S. manufacturing, nations like India, China, and Vietnam offer a sizable workforce at a lower cost. Numerous questions, factors, and cautions can be found online with just a fast search.

Cost-effective labor and easy availability of raw materials are the apparent benefits of production outsourcing to India. There are other advantages, such as access to talent and high-quality machinery. Before deciding to outsource, business owners must assess the costs associated with internal operations.

Using robotic process automation (RPA), many businesses aim to streamline their operations

Robotic process automation (RPA) automates specific tasks using rule-based algorithms on mainframe and corporate software platforms. They can greatly lower operational expenses while automating a variety of corporate activities. RPA has emerged as a critical requirement for practically all industries, including healthcare, manufacturing, finance, data-driven businesses.

India remains the world leader in outsourcing

More than half of enterprises worldwide already outsource some kind of service to India. Since the nation has more than 100 million English speakers, there are no restrictions brought on by a language barrier. Over 150,000 engineering graduates enter the IT sector each year, guaranteeing limitless service availability. Therefore, outsourcing to India has grown very popular.

Some services provided by banks are delegated to India

Banks all over the world have chosen to outsource their non-core activities. Many banks leave their electronic payments, bill-related inquiries and other tasks to Indian outsourcing service providers. Around 10 to 12 years ago, annual maintenance contracts (AMCs) were the foundation of IT services outsourcing in Indian banks.

Best Country For Outsourcing

By now, you must have understood that outsourcing is the strategy you need to use if you want to scale, save expenses, and include the newest technological stack. Which country is best for outsourcing is the next issue you must deal with.

Gild research found that Indian developers scored 11% higher on math and reasoning tests than their American peers. In contrast, they drastically underperformed on tests in HTML and PHP, so if you’re searching for web development, you might want to be sure the outsourcers you will be dealing with have a solid track record of work output.

PayScale estimates that a software engineer in India makes an average yearly pay of 779,700Rs, or $11,139.

Depending on the service package opted out for the company and the number of employees, the clients of IT outsourcing companies usually spend between $85 and $150 per user each month in India.

With an average cost of $100 per user and no on-site servers, this would cost about $60,000 per year for a company with 50 employees.

Harikrishna Kundariya

CEO, eSparkBiz

Harikrishna Kundariya, a marketer, developer, IoT, chatbot and blockchain savvy, designer, co-founder, Director of eSparkBiz @Software Development Company where you can Hire Software Developers. His 14+ experience enables him to provide digital solutions to new start-ups based on Web app development.