Considering India's reputation as an ideal country for outsourcing, what are the strategic rationales for business outsourcing ?

Résumé du document

There is a recent, but very strong tendency for companies to focus on what they do best, their core business. This follows a previous tendency of vertical and horizontal integration that has led big companies to acquire skills and capabilities distant from their area of specialisation. Sometimes, it has been profitable and has allowed companies to stay on the market and grow, but in most cases there has been an exaggeration that has led to inefficiency, and global costs increase. After a global economic crisis that has led to heavy cost reduction programs in any industry, best practise companies are now returning to focus on their core business externalising peripheral activities. This request for externalised service has led to the empowerment of the outsourcing Industry, that has developed widely its offering. The main driver in favour of the outsourcing of an activity is a cost reduction for the company, that outsource its non-core activities. There are some secondary advantages such as, increase of the quality level, flexibility and scalability and this is explained by the fact that the activity outsourced, is the core business of the outsourcer and there is a service level agreement between the two parties that set the rules of the game.

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[...] Bombay, for example, is now called Mumbai in India. It is important to know the proper Indian names of these cities, especially for foreigners who may interact with political leaders and bureaucrats for developing some business in India. Tier these cities make the shortlist of most companies, because they offer the best workforces, infrastructure, access and lifestyle. Tier these cities have most, if not all, of the qualities of the Tier 1 cities; For various reasons, however, they have not achieved the same level of prominence. [...]

[...] This prevents the Indian offshore industry from moving up the value chain quickly enough to continue dominating the global sourcing service market. Fortunately, IT forces are much more involved by the positive trend of education (for example, knowledge in computer systems or call centers, in accountancy, Strategic rationales for business outsourcing 4 DESTINATION INDIA 4.1 What to Outsource in India Evaluation Factors Infrastructure Indian cities' infrastructure is not comparable to most major Western cities. The quality of the roads, power supply and the other infrastructure may vary from district to district. [...]

[...] This cost of living associated to the involved skills and knowledge requested for high intellectual jobs, enhance a disparity of populations, whose standard of life and educational levels get more and more far between countries and big industrialized cities. Political Support Businesses must assess the level of political support in the areas they are considering, from the national government on down. Any decision has to be made, according to good connections at the state level. Thus grants seems to be available for any good and suitable projects. [...]

[...] To counter wage increases, many offshore outsourcers are implementing large team sizes and long-term projects to help maintain utilization levels at above 75 percent. With larger teams comes the ability to include new college graduates in the mix, enabling them to train on the job. Today, countries like India should work on creating an identity for themselves, by creating a brand image of delivering good quality work and not merely as "Low cost labour provider".They should foray into areas where they have an expertise and buid upon it. [...]

[...] But why should we choose India to offshore a part of our business ? Today, according to statistics published in several websites, India is the leading destination for offshoring services. The crux of offshoring is cost reduction and better operating margins for the companies that offshore to India, China or any other country. An English speaking well educated workforce India has an edge because you have very good quality English speaking people who are willing to do routine work at a highly competitive price. [...]