The United States of America is the largest outsourcer in terms of both volume and value. The next largest outsourcer is the United Kingdom. However, these countries seem to bear different viewpoints. Whereas there is a big outcry against outsourcing to India in the US, the UK has recently retreated its faith in the wisdom of outsourcing to India. Other European countries are the third resource for outsourcing to India. Analysts however feel that Europeans have more to loose from this arrangement than the Americans mainly due to 2 reasons. Firstly all those countries where outsourcing is done buy their equipment from the US, even those that are outsourced by Europe; and secondly the workforce in the USA is considered flexible and has a capacity to upgrade but the European workforce is considered inflexible and therefore less prone to upgrade and get new jobs.
Countries being outsourced to [MAP]
In terms of offshore centers, India remains the undisputed leader, with China and Russia emerging as strong contenders," Gartner has said in its report. Countries like India, Malaysia, and the Philippines are happy to offer well-educated, English-speaking workers at a fraction of the price prevalent in the United States and are therefore reaping in rich dividends. Other countries benefiting from outsourcing are Mexico (where the first jobs from the US moved), Bangladesh and Sri Lanka.
However the most startling fact is that a lot more work is being outsourced to the US in comparison to other countries like India. The Wall Street Journal says that the US commerce department has released data saying "US exports of legal work, computer programming, telecommunications, banking, engineering, management consulting and other private services jumped to $131.01 billion in 2003 from $8.42 billion in the previous year." In contrast, the value of work outsourced by the US to other countries was over 40 per cent less. In 2003, the US outsourced work worth $77.38 billion, $7.94 billion higher than that in 2002. So, while US politicians are in favor of imposing restrictions on US jobs being exported overseas, the country is actually making a surplus of $53.64 billion on outsourcing.
The disturbing factor for Americans however has been, that while outsourcing to the US has grown by under 7 per cent in 2003, and outsourcing by the country has grown 11.43 per cent. But as the Journal points out, if US efforts on curbing outsourcing provoke a retaliation, the country would lose more, both in terms of the surplus that it enjoys on outsourcing as well as the competitive edge its industries get by outsourcing to cheaper locations.
India too out sources
Though there seems to be so much controversy surrounding outsourcing to India, India herself seems to have matured into outsourcing. Some of the best and biggest Indian companies are outsourcing not just any old jobs but strategic IT functions to some of the best in class global companies. Strategic outsourcing is in fact the fastest growing segment in the Indian IT market, say industry experts. So far the outsourced deals have mainly been to companies of foreign origin who have set up office in India, so the jobs still remain in India. Among the notable deals struck are those between Bank of India and Hewlett-Packard, Dabur India Limited and Accenture , and Manipal Academy of Higher Education and Hewlett-Packard India Sales. There is however the case of Tata Counsultancy Services (TCS), one of India's largest exporters of software, that has begun to offshore its staff. According to reports, by 2005 TCS plans to have 3,000 (15% of its global workforce) software engineers in China.
The Shift from other Nations
Cheap labor is available in many parts of the world but it does not come with the maturity that India has gained over the years having entered the field early. Many companies in India have scored a Level 5 rating from Carnegie Mellon's Software Engineering Institute, the highest international standard a software company can achieve. In fact of the 70 or so companies in the world that have earned this designation, half are from India. That does not leave much choice to outsourcers. The Indian market is also a tried and tested market so newer jobs are coming to India, but more than that, it is the growth in the value chart that has endeared customers to India.
Last Updated on : 20/06/2013
Job Outsourcing to India
