Globalization
A new era of globalization began in the 1980s and brought along a significant decline in costs of transportation, communication, and production, and considerably improved inter country competitiveness; and broke down trade and cultural barriers among countries. The concept of a sovereign nation has been increasingly questioned in recent years. Some, indeed, have imagined a world without boundaries, without countries. Others who doubt the benefits of globalization have called for increased protectionism and greater regulation of economic activity. Offshore outsourcing is a product of this fast moving globalization and likewise it has its supporters and its detractors.
Communication (Internet / travel)
But for the ease in communication, offshore outsourcing could be unthinkable. The shift from atoms to bytes and bits has made this possible. Distance has become immaterial to many of today's business processes. Business services can reach and be reviewed by the company as many times and in as much time as they would at the site itself. Data transfer and communication time has immensely shortened. The interface too has changed with video communication. where all matters can even be discussed face to face. Often there is the need of the outsourcing company sending 1-2 people to visit the offshore company to start a personal relationship with the programmers they are going to work with and to understand the cultural problems and settings. Once that is done communication via email, chat or phones is sufficient to keep the projects going.
Government Policies and backing
India has written its success story not in spite of the chaotic, robust democracy, but because of it. Decades of Socialist Democracy and affirmative action have allowed the participation of the poorest, for whom education is the only way out. This mindset has led to increased schooling. On another plane, Socialism and import-substitution, produced generations of entrepreneurs who had to develop indigenous products, from blades to satellites, with their own resources. That self-reliance is helping India now: In the past two years, six companies have won prestigious Deming quality awards, and their excellence has triggered a surge in export orders.
Liberalization has taken roots in India and the Government has steadily lowered interest rates, eased up forex restrictions, and freed banks from their social obligations. The governments within India, at the Center as well as in certain States, have realized that India has stumbled upon a goldmine and seem determined to mine this gold. As a result, a renewed support from the government is forthcoming.
With the rupee fully convertible, Indian businesses are now free to invest anywhere. Simultaneously, credit banking has lead to a consumer boom and a new and confident India has emerged even as old problems persist.
Outsourcing solved a lot of those problems, The not so rich parent no longer had to dole out lots of cash to send his child overseas, nor did he have to get separated from him for years together. The jobs were coming home and all kinds of people with various levels of qualifications could now get these coveted jobs. The pay may not be as high as in the foreign lands but it surely was enough to make him live life king-size back home among appreciative relatives and a support system.
On the other hand education has taken a beating in the developed Nations. The youth has been in a hurry to earn even as teenagers and have therefore given more priority to earning rather than to learning. Moreover the society is not so averse to what in India is considered lowly jobs. A respectable family would never allow its children to work as waiters, painters, drivers and such things because the class divide and consciousness is too high in India. Moreover the wages ensure that such class differences are maintained. In developed nations the line of division is very thin and social interaction is more at par.
Daniel H. Pink aptly summarizes the social causes of the American outburst against India. "What makes this latest upheaval so disorienting for Americans is its speed. Agriculture jobs provided decent livelihoods for at least 80 years before the rules changed and working in the factory became the norm. Those industrial jobs endured for some 40 years before the twin pressures of cheap competition overseas and laborsaving automation at home rewrote the rules again. IT jobs - the kind of high-skill knowledge work that was supposed to be our future - are facing the same sort of realignment after only 20 years or so. The upheaval is occurring not across generations, but within individual careers. The rules are being rewritten while people are still playing the game. And that seems unjust.
Couple those changed rules with the ham-fisted public relations of the American companies doing the outsourcing and it's understandable why programmers are so pissed. It makes sense that they're lashing out at the H1-B and L-1 visas. US immigration policies are a proxy for forces that are harder to identify and combat. It's easier to attack visible laws than it is to restrain the invisible hand. To be sure, many of these policies, especially the L-1, have been abused. American programmers have done an effective job of highlighting these abuses - and during an election year, Congress will likely enact some reforms. But even if these visa programs were eliminated altogether, not much would change in the long run."
Economic
The economic factor has been greatly highlighted in this issue. Even though it is indeed a major factor in the process, analysts have been overlooking the other very important factors. It is true that if it were not due to economic reasons outsourcing would have never happened. It works both ways for the people who outsource as well as for those that take up the jobs. Cutting costs has been the major concern of companies who are faced not only with recession but also with growing competition. Coupled with that is the growing stature of a fussy and smart consumer who wants the best for the least. Development of easy transportability and service delivery has given the consumer a global market and he is willing to make the best of it. This has made it imperative for companies to deliver to the demands of the consumer.
Developed nations have had a good per capita income. Their workforce is used to the high wages and is therefore unwilling to comply with lower wages.
Even as certain part of the Indian think tank described the gaining popularity of English as a medium of education, a hangover of British Slavery, Indians continued to learn the language because it had already become a status symbol. Also some states who felt Hindi, the National language, had been imposed upon them preferred the use of English to connect them to the other parts of India; and English which was stipulated to be phased out as the official language of the government refused to step down. Moreover, English was gaining global acceptance and Indians were unwilling to limit themselves. In this background, when IT happened and English became the lingua franca of the Internet, the Indian smoothly fitted in. It had the largest population of English speaking people among the third world countries. China and Japan who had technologically challenged the US and raced ahead in manufacturing could not do a repeat performance, as its populace had never mastered foreign languages. India is a multi - language society and many speak at least three languages. As a society they are very comfortable with a multi-lingual system and schools all over India follow the 3-language formula envisaged by former Prime Minister Mr. Rajiv Gandhi. This was done with the intention of National Integration. However, with Globalization benefiting Indians and their will to take on the world; more and more children are learning foreign languages at school. Of the three languages two are Global and the third is mostly the mother tongue. Generally English or the mother tongue forms the medium of education and the next important language that is studied. Thus English is at most the second language studied. In many English medium schools, however the second language is either German or French. Even though the USA forms the largest outsourcer, India could soon be changing focus to Europe as its populace is increasingly being trained in European languages.
Location
Being located on the other side of the world gives the advantage of time difference to India and some companies find it a definite advantage. In fact many companies are giving users in Europe and the USA the choice to choose the place of service in processing their bills and insurance documents, but always warn them of the time advantage they get if they get their jobs processed in India. Consumers are told that if they choose to process in India they may get the required job done in a day or if they choose a local service they get the same thing done in two days. The growing resentment towards Asians has also made call centers provide an option.
Last Updated on : 20/06/2013
Job Outsourcing to India
