Is Indian

Offshoring an
advantage for
Eternity- For the
Motion

An NEP Presentation by
ILLUMINATI- FG2 Fall Winter
2008 Batch
“ We will create a system of education that will
not change their colors, but will make them
white in their thinking”
-Lord McCauley
(19TH century)
Seed to Tree
 Birth of Offshoring

 Entered the language in 1980s.

 Introduced by information system trade press.

 Outsourcing  Coined to describe growing trend

of transferring information system out of house to

3rd party company.

Source: Indian offshore Advantage by Ian Hunter

 Offshoring is an extension of outsourcing where
relocation of work moves across geographical
organizational boundaries.
 Offshore processes can be handed off to third-
party vendors or remain in-house.
 Advantage of lower-cost labor in another
country.
Outsourcing

Outsourced In-house
off shoring off shoring
 Idea behind Offshoring

 So that companies can focus on their

core activities and maintain control over
their strategic elements.
 To increase profit margins.
 To seek advantage by offshoring work to
countries which are cost effective.
Idea meets Advantage India
 India Rising

 Second headquarters of major companies like

GE, British airways etc..
 Boeing 787 handed over cockpit maintenance
work to HCL Technologies.
 Morgan Stanley  hired Indians to perform
analysis of stocks.

Source: Boeing.co.in , Businessweek.com

Indian Offshoring Advantages

Under 3 Main Heads

 Availability of large talent pool

 Low cost

 Fast turnaround time

Emerging Competition
 India
Philippines
India’s edge over Philippines

 India leads Offshoring with 35% market share as

compared to 15% that of Philippines in 2008.

 In terms of graduates at 480, 000, Philippines

lags behind India’s 30, 00, 000.
India’s edge over Philippines
 Challenges faced by Philippines

a. Specialized skills,

b. Access to quality management talent, and

c. Talent migration
India’s edge over Philippines

 Philippines lags behind India when choosing an

Offshoring location, such as:
a. Risk
b. Infrastructure,
c. The availability of vendors, and
d. A paucity of skilled middle managers.
India
China
 Points of difference

 Human Resource and Knowledge

Management
 Points of difference
 Perception is Reality
 China may fall victim to its own success
 Cross Country Constraints
 Industry
 Growth Investment
 ITES – Information Technology Enabled
Services.
 BPO – Business Process Outsourcing.
 KPO – Knowledge Process Outsourcing.
 RPO – Research(Recruitment) Process
Outsourcing.
 HRO – Human Research Outsourcing, etc.
ITES - outsourcing of processes that can be
enabled with information technology and
covers areas like finance, HR,
administration, healthcare,
telecommunication, manufacturing etc.
BPO-The contracting of the operations and
to a responsibilities of a specific
business function third-party service
provider.

KPO- knowledge and information related

work is carried out in a different
company or by a subsidiary of the same
organization.
RPO -Is a form of outsourcing where an
employer
outsources transfers all or part of its
recruitment activities to an external
service
provider.
HRO - Offer an array of Human Resource
Management solutions designed to
reduce the costs of traditional human
Resource models.
 Medical transcription
 Customer support services
 Technical support service
 Exam result evaluation
 Insurance processing
 New Business/ Promotion
 Policy Maintenance/ management, etc.
 Direct employment to 1.5 million
professionals
 There is a positive relation between
high skilled services and GDP.
 It has led to the enormous
infrastructure improvements.
 It has led to the development of SEZ.
 Occupation Structure

Exports
Others

Petroleum
products

Economic survey 2007-08

 Offshoring is profitable for Indian ITES in the
case of rupee depreciation.
 Engineering goods and IT services
contributes 30% to Foreign Inflows in 2007-
08.
 The competition for talent is heating up.
 Harmonic political relations with other
RECESSION IN USA AND
OFFSHORING
WHAT IS THE CONNECTION ?
Will India sneeze when US catches a cold
?
 Thanks to Offshoring
 Offshoring is an integral part of the rising
tide in globalization
 Its reputation for low-cost but high quality
work
 Vast and growing IT labor pool being
trained to support global client base
Offshoring to India – a propellant on the
US economy
 It is the business of America to design and
innovate
 Jobs off shored create jobs within the
country
 US exports will be billions of dollars higher
in the long run
 International relationships could influence
 The Next Big Thing in Offshoring
 Engineering design Offshoring
 Increasing trend of us based newspapers
publishers Offshoring to India
 The delivery models are well established
 India is well positioned to become a back
office for America
 Indian firms are generating thousands of
new technology jobs
 Will it last till Eternity ?
 The reported death of Indian offshoring is
greatly exaggerated.
 Productivity and scale.
 Salary increases with Productivity
improvements
 Multiyear experience advantage.
 Vastly improved its IT infrastructure.
 Will it all last till Eternity ?
 Leverage in India's university system.
 Moving to tier-II and tier-III cities.
 Education on a rise in India.
• -560 universities and 13,200 higher education institutions
produce an estimated 14 million employable workforce—the
largest of all 28 countries MGI has studied.

 The private spending on education -expected

to increase 13% to 15%
• It is estimated that by 2011-12, it will surpass Rs. 100,000
Crore from just Rs. 26,883 Crore in 2000-01.
(Source: Ministry of HRD, Government of India, 2006-2007).

 Although China has increased expenditure on

education, it only accounts for 3.01 percent
of the GDP in 2006
(Source: Article in Beijing News.)
• Pune
• Chandigarh
• Ahemedabad
• Jaipur
• Rajkot
• Kochi
• Goa
• Bhubaneshwar
• Vishakapatnam
• Patna
• Baroda
• Varanasi
• Nagpur

Most of the operation in 3rd tier

cities
would be that of sub-contracting
Younger Population.
 Will it all last till Eternity ?

 2/3rd CMM Level 5 organizations are

based in India.
 Government Initiates.
 Time Zone Difference.
 NASSCOM Initiatives.
 When you offshore to India, you offshore to
world-class systems and quality.
 Indian offshoring industry is at a growth
stage and the trend is expected to continue.
 India’s unique set of attributes translate to a
sustainable position as an offshoring
destination which will last till ETERNITY.
 Gaurav Kumar
 Jugal Desai
 Kshitij Arora
 Niharika Goel
 Rahul Mahajan
 Rosy Walia
 Sukhneet Wadhwa
 Thank You
We are now open to queries