Industry Analysis Case Study

Emerging Destinations in Outsourcing: The Indian dilemma

OR

Abstract:

As of 2006, India continued to remain an IT outsourcing powerhouse, with $17.7 billion revenue in software and IT services exports, compared with $3.6 billion for China and $1 billion for Russia, according to the trade organizations in each country. Also, India’s outsourcing industry was still growing at a faster pace than that of Russia’s and other outsourcing centers. But as labor costs and turnover rates began rising in India, companies started looking out for cheaper labor. As a result, many alternative outsourcing destinations emerged. Countries speaking European languages like Hungary, Czech Republic, Russia, Poland, Bulgaria and Romania were benefiting from the trend of ‘nearshoring.’ Moving IT operations into developing countries can pose big risks, such as language and cultural differences, geopolitical instability, and the risk of stolen intellectual property. India’s outsourcing players needed to overcome major challenges to continue their growth and sustain their competitive advantage over other emerging outsourcing destinations. India needed to improve its infrastructure, maintain competitive labor costs and tackle the turnover rates of labor attrition. It had to concentrate more on new areas in outsourcing such as E-governance, Retail Services Outsourcing, Pharmaceutical Research, Financial Services and Healthcare.

The case outlines the changing global scenario of the outsourcing industry, emerging destinations and challenges faced by Indian outsourcing companies towards keeping competitive advantage and retaining business.

Pedagogical Objectives:

• To introduce the students to the Outsourcing industry
• To highlight the various new destinations coming up in outsourcing
• Factors that constitute a successful outsourcing destination.

Keywords : Outsourcing; Nearshoring; Emerging destinations; Industry Analysis Case Study; Indian outsourcing industry; Chinese outsourcing industry; BPO sector; Offshoring