With increased globalization, outsourcing has emerged as a trend having a lot of potentials.
It has become popular because of cost-saving and high returns.
Besides this, offshoring also offers a skilled workforce and on-time delivery.
Outsourcing has been a popular and profitable option for organizations all around the world in recent decades. It allows organizations to complete activities at a lower cost and with a higher return on investment.
China, the Philippines, and India have all become popular outsourcing destinations in Asia. India has emerged as a leading outsourcing location for Software Development Services in the year 2021.
Outsourcing to India may be the ideal choice for you whether you want to optimize your business or develop it. Over the years, India has managed to evolve as the best outsourcing destination across the globe.
According to A.T Kearney Global Service Location Index 2021, India is ranked number 17th when it comes to digital resonance ranking.
Many offshore development companies cater to the requirements of different countries across the globe.
Besides that, many eye-opening statistics will make you believe that India is a country that you should consider for outsourcing your project.
The Deloitte study, conducted on various global businesses claimed that more than 59% of businesses are successfully outsourcing their products to India already.
And 22% of them are right now planning to outsource in the coming future.
India Outsourcing Statistics to Consider
India has the largest pool of talented people and it is what drives the business to the country.
Here are the numbers that will certify prove that India is the best outsourcing destination in the world:
- India’s IT outsourcing business is anticipated to increase at a 7.25 percent compound annual growth rate (CAGR) from INR 5,649.47 billion in 2019 to INR 8,830 billion in 2025.
- When compared to industrialized countries, outsourcing to India is far less expensive. In India, developers may be found for an average of $25.
- By 2022, it is projected that over 40% of India’s workers would have improved their skills and become more valuable assets in the growth of business process.
- India tops the list of nations with the most ISO-9000 certified software businesses, accounting for more than 75% of all CMM Level 5 certified companies globally.
- India stands only second to the USA regarding the number of English-speaking natives, removing any communication hurdles.
- According to a C SharpCorner study, India will likely replace the United States as the world’s leading software developer by 2023.
Reasons to Outsource to India
As businesses have expanded globally, outsourcing relationships have undergone a sweeping change.
Although cost remains a crucial consideration, another important aspect is the increased focus on value-add and product quality.
Following are the reasons why innumerable companies outsource their projects to India:
a) Software Industry Size
A country having a massive population also has a big size of the Indian software industry which is even bigger than the entire Europe.
In FY21, the IT & BPM industry is expected to generate revenue of US$ 194 billion, the rise of 2.3 percent year on year. In FY21, the IT outsourcing industry is expected to generate US$ 45 billion in domestic revenue and US$ 150 billion in export income. IT expenditure in India is expected to reach US$ 93 billion in 2021 (7.3 percent YoY growth) and US$ 98.5 billion in 2022, according to Gartner estimations. As of FY21, India’s BPM sector employs about 1.4 million individuals, with IT and BPM together employing over 4.5 million people.
This clearly depicts that software outsourcing in India is a globally proven model as there are many Indian companies that have mastered successfully in delivering great projects.
b) Skilled Workforce and Best Companies
Another major reason to outsource in India is that many Fortune 500 companies like Cisco, Microsoft, Google, Walmart have their office in the county.
Companies like Accenture, IBM, Infosys, TCS, and HP are big names in the technological industry.
In 2017, the industry provided direct employment to four million individuals and indirectly to over ten million. $20,000 worked for Tata Consultancy Services and 228,000+ worked at Infosys.
The revenue of TCS reached 1.5 trillion Indian rupees in 2019. This made it the largest India-based It company that particular year.
This particularly depicts that the talent pool in the country is quite mature having proven experience of collaboration across the globe.
c) Round the Clock Services
Companies that are in a different geographical location prefer Indian offshore companies as they get round-the-clock services.
Their in-house team can work during the day on a particular project and when their working hours end, the offshore team starts its work.
This ultimately speeds up the work process in an efficient and controlled way.
d) Cost-effectiveness
Cost is the primary reason to outsource a project to any country.
Do you know that India has the highest number of ISO-certified firms in the world? Yes, that is true.
In the US if you hire a developer it may cost you $80 per hour which is quite costly. On the contrary, an Indian developer charges $15/hour.
Less cost has a direct impact on increased ROI. Instead of hiring in-house or freelancers from other countries, it is recommended to hire dedicated Indian developers.
They offer not only flexibility but also capital expenditure reduction on infrastructure and maintenance by a considerable margin.
e) Massive Support from Indian Government
Information & Technology offshoring companies have shifted their approach from plain basic agreement to tailor-made agreement that focuses on nice expertise.
One of the most common approaches is sharing risks and responsibilities. From a legal perspective, when a software development company acts as a service integrator, then an important part is aimed at procurement related to the clauses.
What actually works for Indian outsourcing is the massive support that it receives from the government.
Here are a few acts that make it worth outsourcing
a) Information Technology Act 2000 (IT Act)
The Informational and Technology Act is an important piece of legislation for outsourcing firms.
It is relevant for e-commerce entities that deal with online transactions, data protection, cybercrime, electronic communication, and storage information.
The implications under this Information and Technology Act are significant considerations when drafting an outsourcing contract in India.
The cross-border transfer of sensitive data is a major concern.
So, it is subjected to the rules and regulations framed under the IT Act prescribing certain security standards that should be followed by parties.
b) Legal or Regulatory Restrictions on Data Processing
In the absence of a specific law regarding data processing and security, the provision related to data protection is governed under the IT Act.
This IT Act defines “reasonable security practice and procedures” in order to protect information from unauthorized access, damage, and modification.
The Information Technology Rules 2011 (SPDI) is framed under the IT Act that gives an exemplary standard of reasonable security practice.
This includes the provision of privacy and data policies to be followed by corporate entities. Sensitive personal data and information are clearly defined in the SPDI Rules.
This includes information related to passwords, bank account details, credit/debit card numbers, etc.
When it comes to handling personal information, the IT Act and SPDI Rules have strict regulations for the collection, storage, usage, purpose of storage, and disclosure to third parties.
The disclosure of data to the third parties required a clear understanding and explicit consent of the information provider.
c) Regulatory and Legal Environment: Indian Contract Act, 1872
This act is applicable to any contractual arrangement that is part of the Indian party or Indian and foreign company.
This act provides elements of a valid contract and remedies if there is any breach in terms of the contract.
As the governing law, the companies have to agree on the terms and conditions related to the consideration, warranties, indemnities, and other relevant clauses.
Read more at: Why India Has Become the Premiere IT Outsourcing Destination of the World?
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