Current Trends in Outsourcing

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Current and future trends in outsourcing pose big challenges for India. India is more than capable to meet the challenges head-on but the preparation to tackle future challenges should begin right away. India will have to do all it can to maintain the top position in outsourcing that it occupies by providing top quality services, as it has been doing for the last two decades.

In present times, Business Process Outsourcing has expanded to include a number of new services like IT outsourcing, financial outsourcing, Manufacturing outsourcing, ITES outsourcing, etc.

Additionally, outsourcing has become very sophisticated and technology intensive. Clients of Indian BPOs are not only looking to cut costs but are also considering the technology BPOs are bringing to the table. Today companies outsourcing their work to Indian BPOs expect Indian companies to add value to their business processes, impart excellence to their customer relationship, improve quality, speed up product distribution in market, and meet world-class standards in corporate governance.

India faces stiff competition from nations such as China, Philippines, Sri Lanka, Pakistan, Bangladesh, Brazil, and several other emerging economies in Eastern Europe. This is bound to put pressure on the margins of Indian service providers as more and more countries join the BPO bandwagon. Outsourcing has instigated many a political debates and it is only going to increase in the coming year as the US presidential contest heats up. In the coming months expect to hear a lot of negative views on outsourcing emanating from the United States. However, US CEOs are well aware of the value that Indian BPOs add to their operations.

Currently, China reigns supreme in manufacturing outsourcing and India occupies the top position in the services sector but things could change if the private sector and the Indian government lower their guard. China is consciously focusing a lot of energy on the financial, banking, travel and tourism, software and application development sectors. China’s outsourcing industry is growing at a rate of 9.5% as compared to the 6% growth of the Indian outsourcing industry. Chinas refusal to strengthen the Yuan is bound to have an impact on the Indian outsourcing industry. Outsourcing expenditures of organizations worldwide is rising and India needs to pull up its socks if it wants to win the race against China. India will have to invest heavily in infrastructure, and will have to revamp its centers of higher education. Over the next 10 years India will have to increase the number of universities and improve the standards of existing universities if it wants to compete with China and other developing countries.

India is poised to record impressive growth in services, requiring advanced English language skills, like content, medicine, research and analysis, legal, engineering, and insurance outsourcing. Outsourcing will however remain immune from the current recessionary trends that can be seen in other sectors of the world economy.

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