The IT-BPO industry is one of the strongest sectors of India and other emerging economies. Creating value through outsourcing has emerged as a popular competitive strategy for firms in various industries. In order to survive in the domestic and international marketplaces, firms, especially in developed countries, are using outsourcing to accomplish a variety of tasks.
In the last few years, offshore outsourcing has emerged as a popular competitive strategy and emerging markets viz India, China, Malaysia has become increasingly attractive locations. As firms in developed countries like the US, UK and other European countries continue to face enormous challenges to sustain competitive advantage, outsourcing to emerging markets is becoming an increasingly important source of business renewal and corporate transformation.
Companies favor outsourcing owing to the fact that they are available at much cheap rates. There are also few other influential factors like lack of resources and Companies may seek internal savings to focus money and resources towards core business. Also when a job is outsourced it becomes easy to manage and companies have better control over their workforce since they are on contract basis. On the flip side, outsourcing has some disadvantages like delays in deliverables as more number of people gets involved, lack of interest and commitment in outsourced workforce, lack of communication.
As "Outsourcing" became a popular political issue in the United States and the European countries, Co-sourcing is catching up. Co-sourcing is a business practice where a service is performed by staff from inside an organization and also by an external service provider. It can be a service performed in concert with a client's existing internal audit department. The scope of work may focus on one or more aspects of the internal audit function. Co-sourcing can serve to minimize sourcing risks, increase transparency, clarity and lend toward better control over the processes outsourced.
Despite the economic and other hiccups the IT service industry continues to grow as the software industry becomes more competitive and companies from advanced countries try to reduce overhead.
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Written by Meena (meena.pgdm14c@greatlakes.edu.in)
An interesting point to be noted in this context is the case of Philippines vs India with respect to BPO industry. The cost of maintaining a BPO in India is 1:3 [For one employee employed in US, you can employ 3 employees for the same salary]. But in Philippines it is 1:5. Also, filipino ladies are more fluent with the american accent. These factors help Philippines to grab the BPO market share from India. Thus, US companies are slowly moving to Philippines.
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