Monday, March 08, 2004

Best Countries For Outsourcing

Outsourcing generally refers to the practice of farming out jobs from their home base to other countries, largely in an effort to cut costs. Many American companies are now transferring technology development, customer service, financial and administrative jobs to international markets. The move parallels the dramatic shift of manufacturing jobs outside U.S. borders.

India is the leading recipient of the outsourcing of information technology functions like software development and maintenance, and also business process outsourcing. The latter includes back-office functions like accounting, human resources, call centers and data analysis.

Features that make India Best for Outsourcing:

Labor Pool: India has many prestigious technical universities, but the Indian Institute of Technology stands apart as one of the world's best. India produces 75,000 IT graduates and 2 million English-speaking graduates annually.
Costs: Labor costs have crept upward over the years but have been offset by falling telecom rates. Typical salaries range from $5,000 to $12,000 for technical staff, while back-office salaries range from $3,500 to $7,500.
Government: Outsourcing is so ingrained in the fabric here that the Indian government has a national minister specifically for IT. The government favors IT foreign ownership and imposes no export taxes.
Infrastructure: With redundant telecom and utility infrastructure, there is very good reliability within India's special IT parks. Reliability can be spotty outside the parks or in more remote areas.
Expertise: Application development, maintenance, call centers, financial processing. Experts see India becoming a hotbed for more critical analytical jobs.
Major U.S. Customers: Citigroup, GE Capital and American Express have a very large presence and have set up their own centers here.