Brief on outsourcing IT services:
Outsourcing! Let’s hit the rewind button for it. Yes, outsourcing IT services dates back to the 1980s, and it became a business strategy only in the 1990s. Initially, organizations decided to outsource projects with a notion of cost-saving measures for those functions needed to run a company. It was not related to those involving core business functions. Over the years, the process has evolved. In this internet era, needless to say, that from product to services anything can be outsourced. In this article, let’s focus on having a few insights on outsourcing IT services.
The entry of outsourcing IT services in India:
The advent of outsourcing IT services in India began in the year 1989 which led to the establishment of the software industry in India. The National Association of Software & Services Company (Nasscom) was able to rope in General Electric (G.E) for outsourcing worth $10 million from India. That’s a great head start for the Indian software market. Few of the other earliest players in this industry were Texas Instruments, American Express, British Airways, and Swissair. With this entry, other companies also began to explore their options in India as well. The IT industry suffered its share of political deals, ups & downs like any other industry but we all know the state it has reached now and let’s dig in deeper about it!
Current scenario of outsourcing IT services in India:
According to a recent study, 80% of the US & European outsourcing firms gave India the top spot for outsourcing destination. India managed to brush aside other competitive outsourcing destinations such as China, Mexico, Ireland, and the Philippines. India’s IT outsourcing services industry has a growth rate of about 25-30% per year. Want to know the magic number? Here it is! The Indian offshore industry’s worth is about 150 billion USD. No wonder they are at the top right? Now, let’s have a look at why India is the top choice for IT outsourcing services.
India as top choice for IT outsourcing services:
- Unmatched technical and professional talent – India has skilled & experienced professionals who are adept in handling any project that comes their way. Most of the companies follow and work on the latest tools, methodologies, and models. This is an added advantage in the software field.
- Flexible pricing options – The main reason for outsourcing IT services from India is the flexible pricing options that can save businesses up to 60% of their cost. Companies get a wide range of options to choose from according to their budgets.
- Delivering top-notch services – Though the cost factor plays a major role in outsourcing IT services, the ultimate reason for the top outsourcing destination is providing top-notch services.
- Well-equipped infrastructure and technology – India has a well-built IT infrastructure, and we catch up with the latest technological development very fast and provide the best IT outsourcing services to clients.
- Attractive government IT policies – The Indian outsourcing industry is backed up with a strong pro-IT government providing policies that instill tax-related and other benefits.
Ranking for Global IT outsourcing destinations:
The above statistics show the list of top 20 global IT outsourcing destinations. The statistics are based on three main categories which are financial attractiveness, people skills & availability and business environment. The weight for financial attractiveness is about 40% and for people skills & availability and business environment is about 30%. Offshore industry plays a major role in the hosting country’s economy. IT & BPM outsourcing market has brought in a significant change in India’s overall GDP, making it the largest industry in India. This growth led to India’s economic transformation and to stand high in the global economy. The IT outsourcing service industry in India is expected to grow to a whopping $350 billion by 2025. Yes, it’s a complete package! Now let’s dive into the pros & cons of outsourcing IT services in the business.
Key Takeaways of outsourcing:
Outsourcing IT services have a positive impact on businesses. Let’s look at a few.
IT outsourcing companies avail quality services at an affordable price which in turn provides a mutual cash inflow to both the hosting companies. Outsourcing IT services shows a significant increase in productivity, business value, quality of service and much more.
Now one might wonder how outsourcing IT services reduce risks. The answer points to stringent data security policies that reduce the risk of substandard services and data breach. The projects are efficiently done without any mishandling of confidential data because of these security policies.
Effect on business efficiency:
By outsourcing business processes, a company saves time. Thus, it will be able to focus more on its core functions. Focusing on superior services, reduced overhead costs and time to focus on expanding the business will increase the business efficiency.
Effective resource utilization:
For the effective resource utilization, the workload is shared between the companies during outsourcing IT services. The in-house resources of the companies outsourcing can be used to work on other major business functions.
IT projects are outsourced at a lesser labor cost with no compromise in quality. Hence, outsourcing provides a cost-effective solution. Also, operational cost such as HR, payroll, administrative, power, rent, and utilities are controlled. For instance, another major cost-cutting solution is IT infrastructure. Maintaining an IT infrastructure might be a burden for many companies which can be avoided by outsourcing the IT services.
A Key player in the market:
Through strategic outsourcing of IT services, the companies get the best IT services and simultaneously it leads to increasing productivity by managing the company’s in-house resources. Thus, it allows a business to surpass competitors. It also provides a competitive edge.
Drawbacks of Outsourcing:
Although outsourcing brings in a lot of positive changes to the business, it has its share of pitfalls. Let’s look at the process that could go wrong in outsourcing IT services:
- Losing managerial control- One of the biggest fears for a company during outsourcing IT services is to lose control over the company that outsources projects. The reason for this is due to the non-sync of mission & vision between the companies.
- Compromise on quality- Quality issues may arise when the hosting company doesn’t have a standard procedural norm and no proper experience in outsourcing IT services. Choosing the right company avoids this issue.
- Loss of confidential data– During outsourcing IT services, there is a risk that the confidentiality of the data might be compromised. Thus, companies should take proactive measures while signing the contract/agreement.
- Effect on employee morale- In-house employees might be prone to the fear of losing their jobs because of the thought that eventually, every job will be taken over by the hosting company. When it comes to this issue, the management is wholly responsible for clarifying the objective and importance of outsourcing IT services to their employees.
- Hidden costs- There is a chance that the hosting company might include hidden costs during the process. It can be avoided by drafting a proper contractual terms & conditions and checking whether it is legally binding.
- Lack of customer focus- Hosting companies might not focus on customer-centric approach because they will be working on multiple projects at the same time. Therefore, this approach may result in delay. Also, it could lead to inaccuracies in the project. It is wise to choose a company that can give you an exclusive focus & time.
In conclusion, hope you got an idea about how outsourcing IT services works!
Maestro for outsourcing:
Now we’ll look at the reasons why you need to choose Maestro for outsourcing:
Proven Offshore Delivery model – We have delivered exceptional IT services across the globe ensuring a proven offshore delivery model.
Robust global partner network – We have an extensive network of global partners who consider Maestro, a source of strength in providing the IT services.
Time zone independent operations – We deliver services seamlessly across geographies and time.
Dedicated team – Our expert team provides great support right from the stage of initialization till the launch. Our support is extended even after delivery.