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Why outsourcing to India India's Human Resource Benefit: Every year, approximately 19 million students are enrolled in high schools and 10 million students in pre-graduate degree courses across India . Moreover, 2.1 million graduates and 0.3 million post-graduates pass out of India 's non- engineering colleges. While 2.5-3 percent of them find jobs in other fields or pursue further studies abroad, the rest opt for employment in the IT industry. If the flow from high schools to graduate courses increases even marginally, there will be a massive increase in the number of skilled workers available to the industry. Even at current rates, there will approximately be 17 million people available to the IT industry by 2008. Indian Education System The Indian education system places strong emphasis on mathematics and science, resulting in a large number of science and engineering graduates. Mastery over quantitative concepts coupled with English proficiency has resulted in a skill set that has enabled the country to take advantage of the current international demand for IT. Quality Manpower Indian programmers are known for their strong technical skills and their eagerness to accommodate clients. In some cases, clients outsource work to get access to more specialized engineering talent, particularly in the area of telecommunications. India also has one of the largest pools of English- speaking professionals. Government Policies The Indian government recognizes that Information Technology will influence economic development extensively in the future. IT is a pat of government's national agenda and all policies are driven to achieve maximum benefit to their industry. Quality In the past few years, the Indian IT industry has pursued the goal of attaining the highest international standards of quality. A World Bank funded study conducted as early as 1992 to discuss Indian software strategies had concluded that more and more vendors in the US prefer to get their software developed undertaken in India for its quality and cost advantage. Indian players have created a strong value proposition in the IT software and services arena. India enjoys advantages of people sophistication in terms of a very large pool of English speaking scientific personnel, varied and extensive skill sets in terms of technology, and offering services at globally competitive costs. India also boasts vendor sophistication-with more than 200 companies being quality accredited and serving the needs of over 255 Fortune 500 companies. Today, the world looks towards the Indian IT software and services industry for its good quality and high price performance. According to McKinsey & Co., India has and will continue to have a growing number of vendors successfully working on complex projects across all areas of software and services, and performing at levels comparable to those of leading global players.As of 31st March 2002 , India had 42 companies at SEI CMM Level 5 assessment. The quality maturity of the Indian software industry can be measured from the fact that already 316 Indian software companies have acquired quality certifications and more companies are in pipeline to do so. The other heartening feature has been the growing acceptance and adoption of the newly emerging People-Capability Maturity Model (People-CMM) by the Indian software industry. For a country like India , with its large assets in the form of skilled human resources, the relevance of People CMM needs no emphasis. A large number of Indian IT software and services companies have been quick to realize this and have either implemented or initiated programs. Conclusion • Companies with no overseas experience perceive the issues holding back offshore investment differently than do those with offshore IT or business process outsourcing (BPO) expertise. • Firms in each stage of the journey have different challenges that require suppliers to address unique security concerns, program management needs, and best practices .• In addition, leading global business intelligence and consultancy firms such as Giga, and McKinsey & Co. have cited various reasons for the increase of offshore outsourcing by US businesses to India . Outsourcing is expected to grow to at least 23 percent during 2002 .• India 's quality and cost benefit edge is one of the major draws for these organizations, analysts say. Giga predicts that, compared to other competing countries such as China , Ireland , Israel , and the Philippines , India will continue to dominate as the preferred off shore country . • Forrester Research meanwhile indicates that by 2003, a larger number of companies will engage offshore providers and their budgets too will grow rapidly. • There will be an increase from 12 percent of technology budgets today to 28 percent in 2003. According to a study conducted by Forrester in November, 2001, India 's edge over other competing nations in the IT outsourcing business is based on the country's decade old experience in this area, fluency in the English language, supportive Government policy infrastructure, and high quality offerings .• Today, US businesses are rushing into India to stake a claim to the IT outsourcing market. While a large number of companies are outsourcing their software development to Indian companies, others are establishing a presence in India and participating actively in the software export game .• Indian IT industry is on track to achieve its long term aspirations of US$ 50 billion in export revenues by 2008 and remain the pre-eminent destination for exports. The industry has grown at a CAGR of 46 percent since 1999, which is higher than the growth rate required to reach the target set in the first NASSCOM-McKinsey Study .• Today, India is undoubtedly the pre-eminent destination for offshore IT services. However, China has the fundamentals to emerge as a credible offshore IT services destination in the medium term.
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