Home India 2006 Next-generation outsourcing

Next-generation outsourcing

by david.nunes
Simarprit Singh Issue: India 2006
Article no.: 9
Topic: Next-generation outsourcing
Author: Simarprit Singh
Title: Founder and CEO
Organisation: Compare Infobase Pvt Ltd
PDF size: 1486KB

About author

Simarprit Singh is the founder and CEO of Compare Infobase Pvt Ltd. Simarprit Singh began his career as a Research Associate at NIIT. He left to become an entrepreneur and set up DISC (Information Technology) Pvt Ltd. While at DISC, he made a presentation to the United Nations on Information Technologies and Developing Countries. He later served as the VP of Business Development at Nucleus Software, prior to his return to entrepreneurship at Compare Infobase. Simarprit Singh has a BCom degree in Statistics and a Post-graduate diploma in Computer Applications.

Article abstract

The outsourcing of services and business processes has become increasingly important to businesses in developed countries; it allows them to devote their time and resources to other more productive ends. Outsourcing is also driving an economic and social revolution in countries such as India with a large pool of highly talented, educated workers. If India’s outsourcing segment is to continue to grow to compete successfully, the country will need to invest heavily in infrastructure and in education for its youth.

Full Article

Introduction “The best companies outsource to win, not to shrink. They outsource to innovate faster.” When Thomas L. Friedman quoted this in his best seller The world is flat, he simply emphasized the role that outsourcing is set to play as a key protagonist in the globalization drama. Arguments against outsourcing that look to the flip side of the coin abound; nevertheless, the outsourcing sector is preparing itself for the expanded role it will soon play in the world’s economy. The future The trend that began in the 1980s, when manufacturing units procured materials from low-cost countries, spread to the IT sector in the 1990s, as it searched for a low-cost pool of hightalent workers to service the needs of developed countries, especially the United States. Today, as Customer-Relation Management, CRM, or for that matter Intelligence Outsourcing, rules the day, it is time to shift focus to the other benefits that outsourcing can bring. A recent study by international research firm, Evaluserve, and the National Association of Software and Service Companies (NASSCOM India) creates a compelling case for outsourcing and shows why the concept has become so important to businesses in the US. The study establishes decisively the US need to offshore in order to grow its economy. Outsourcing benefits, such as cost savings and increased flexibility, are expected to make the US companies more competitive globally. Technology is fast becoming an integral part of each of our lives, and outsourcing, which began by offering a Provider to Business to Consumer service, is rapidly evolving into a Provider to Consumer service. Until recently, outsourcing reached individuals indirectly, but now it is providing direct communication between the providers and the end-users. This is resulting in a wider, deeper reach into the consumer segment and generating greater outsourcing revenues. Outsourcing is beginning to evolve, at least in part, to reach the consumer directly at a one-on-one level. This shift in focus can lead any industry to consider outsourcing. For instance, architectural firms stand to gain much from this new line of thought. Through outsourcing of architectural design, an individual can contact an architect directly and, after specifying his needs, acquire a customized design. In the same way, apparel and fashion designers will be able to outsource design jobs and media or even legal firms will be able to outsource an increasing portion of the tasks that are part of their daily routine. Meanwhile, when the focus shifts from business to day-to-day chores, the survey once again predicts great benefits from outsourcing. By performing such simple tasks as locating a publisher for a budding writer or a good school for a harried parent, outsourcing has the potential to simplify life in many ways. This, in turn, will provide the outsourcing sector with huge, unimaginable, opportunities. Impact on India Many look upon India as a nation that has been in existence since Adam and Eve, but has not been able to re-invent itself over the years. Today, India has a fitting reply; the raging success of its Information Technology strategies has not only revolutionised India, but promises a future where India will revolutionise the world. Now that outsourcing is here to stay, India definitely stands in a highly favourable position. India’s greatest advantage is her huge population. This population, encouraged by the government, by industry and the desire for a better future, is preparing itself to face the challenges of its rapidly growing economy. This multi-talented population is playing a key role in sculpting the future of India. So, it comes as no surprise, that following its success with IT, India is beginning to arrange outsourcing deals in the legal and aviation sector and is poised to take on, as well, a range of other ventures. Today, when we speak of one-on-one outsourcing, India, equipped with a huge reservoir of reliable, cost-efficient, knowledgeable English-speaking workers and state-of-the-art-technologies, emerges as the global outsourcing hub. India’s people have the ability to reach out globally to each individual and address their needs. India promises to be the major supplier of the world’s knowledge workers in the years to come. Thumbs up – outsourcing opportunities The volume and scope of one-on-one outsourcing business is expected to be high. This will create a win-win situation – both for the country that chooses to outsource and for the country to which the jobs are outsourced. Given this sort of outsourcing, individuals throughout the world will soon be addressing offshore queries directly. Mr X in the US will speak to Ms Y in India to find himself a good, reasonably priced, physician from somewhere across the globe and a painter R, in India, will directly sell his pictures to B, who is looking for good pieces to adorn her house. The possibilities are immense. Once the concept and the practice are refined and perfected, one-on-one outsourcing will become a basic option for a wide range of functions in most business sectors. Thumbs down – outsourcing challenges This type of outsourcing, though, can also lead to utter chaos since there is no way to stop any individual from starting an outsourcing firm catering to individuals in other countries. In such a situation, abuses are more likely to occur and quality and performance guarantees become more difficult to control. There will be a great need for strict rules and regulations to protect against the likelihood of abuse and guarantee the quality of service. India still lacks the legal structures and perspectives needed to effectively regulate the outsourcing sector. Despite India’s large pool of talent, there is concern about the future regarding certain critical talent shortages. Research by the McKinsey Global Institute shows that in terms of suitability for employment by multi-nationals, India’s vast supply of graduates is smaller than it seems. Moreover, wages for India’s offshore business employees have already risen steeply in the most popular off-shoring destinations, such as Bangalore and Mumbai. If, on one hand, large population is an advantage, on the other hand the great number of illiterates in the population is India’s biggest disadvantage. Since the majority of the country’s 300 million unemployed youth are from a low/middle class background with access only to inferior educational institutions, they are for the most part ill prepared to assume a role in the emerging high-technology driven economic boom. India is poised to grow, but, with problems like these to contend with, it will have to struggle to meet the competition from the other low-wage countries, such as China, Hungary, and the Philippines, that are gearing up to challenge India’s lead. Its inadequate infrastructure, poor roads, horrible traffic management, pathetic airport facilities… all add to India’s offshoring woes. Addressing concerns The bottom line is that India has a lot to offer. The overriding need of the moment is to generate quality manpower. The country needs to produce more research scholars. India needs to give birth to more Aryabhattas – the great astronomer and mathematician of India’s classical age thought to have first conceived the heliocentric solar system and invented the ‘zero’ – so that more breakthrough concepts can be invented. What better way to achieve this than to utilize the gains of the IT revolution to build bricks and mortar schools to bring high-quality education to India’s youth and prepare them to compete in today’s global information society. India’s leaders need to seriously ponder plans to inject IT into every Indian’s veins and pump them full of the spirit the soon-to-be-developed India will need. Two decades of the IT revolution should be sufficient time to equip the villages, where the majority of India’s people still reside, with enough high quality technical – know-how so that even a farmer will be able to actively participate in the new avatar – the new manifestation or model – that outsourcing will bring to the country. In addition, India’s already literate youth should be encouraged to continue their studies – move on to higher study assignments in every possible field – to create a quality-rich research pool. This will help our country keep her head above water and not drown in the high seas of global competition. Still, high-quality talent can only be generated when academics take keen interest in producing it. Today, this is difficult given the huge disparity between academics and students; a professor in a prestigious business institute often earns a negligible salary compared to what his students will earn in the future. The need for plans to improve the crumbling – weak infrastructure, which may give way under the weight of the booming economy at any time, is critical. Once policies and decisions are taken to address this and other primary concerns, India will be easily able to claim leadership of the next generation of one-on-one outsourcing. ESHQ Look at anyone in India and you will see the future of the outsourcing industry, but how can we prepare this person for the responsibility? Well, India has always been the epitome of ESHQ – Love, in Hindi. ESHQ also defines the competitive differential and an altogether new interpretation of success. ESHQ represents Entrepreneurship, Speed, Horizon and Quality, and the combination of these four qualities will bring success to the outsourcing industry. There is an overriding need to let ESHQ flow freely through our workers’ veins, so that quality of living is enriched and the world becomes a better place to live in.

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