Undertaking a new round of service outsourcing of multinational corporations has become a new way for many developing countries to use foreign capital to achieve economic growth.
The new round of service outsourcing of multinational corporations has undoubtedly provided new development opportunities and broad market space for the development of India’s service industry and the effective use of foreign capital.
Additionally, Offshore IT services outsourcing is an inevitable trend that cannot be ignored and a major business strategy that must be treated with caution.
Offshore outsourcing is a complex and important business decision. Beforehand, it is necessary to carefully analyze the research, not only to understand the benefits and business opportunities brought by offshore outsourcing, but also to understand the relevant business risks.
Business Strategy and IT Outsourcing Services
The benefits of offshoring are very obvious. The first is to greatly reduce costs. The original intention of more than half of network operators to conduct offshore outsourcing is to cut costs. Companies that adopt an offshore IT outsourcing service early are expected to save about two to three percent of their costs and other additional expenses.
These expenses mainly include labor expenses, recruitment expenses, national insurance fees, and real estate. For labor expenditure alone, the salary of Indian employees may be only about one-tenth of that of US employees.
The second benefit to hiring offshore staff is to improve quality. As the telecommunications industry moves toward advanced data services, skilled and low-paying employees are important to the business.
In developing countries such as India, well-educated employees are even more qualified than those in the United States. The joining of these employees is beneficial to the improvement of the quality of products and services.
Offshoring also helps to strengthen the competitiveness of the company, because the work team is located in different time zones around the world, can operate 24 hours a day, and shorten the time required to develop application solutions.
In the current highly competitive global telecommunications industry, it has long gone for operators to spend half a year or more to test the inefficiency of their products.
Power of Outsourcing Services
Although most of the offshore outsourcing India strategies adopted by enterprises are due to the need to cut costs, cost pressures are not a new problem. So why is offshore outsourcing so popular now? This is because the development of many aspects has promoted offshore outsourcing to become a reality.
Fifteen years ago, some pioneering companies in the fields of financial services and high-tech manufacturing launched offshore outsourcing services. Most of these companies have succeeded, which has brought the “snowball” effect and set a good example for other industries.
The development of communication technology is another important factor. In the past, the coordination of behavior of offshore outsourcing companies was always limited by distance, but breakthroughs in communication technology eliminated this obstacle.
Cheaper, more convenient, and more advanced communication technologies make communication half a world as easy as face to face.
In addition, the high-tech boom of the late 1990s created a large number of employment opportunities. Technical workers in developed countries were in short supply, and some companies turned to foreign employees.
Most of these employees are foreign immigrants, and a small number of them work offshore in offshore form. In either case, companies and their customers are becoming accustomed to communicating with foreign workers, which forms the basis of today’s offshore outsourcing trends.
Although offshore outsourcing has all the benefits, it is never easy to make a decision and must fully understand the risks posed by the strategy.
For operations that are complex and difficult to control, network operators must develop new business operations procedures to ensure proper monitoring of product development and customer support activities to achieve a high level of service.
The differences in language and culture and the degree of protection of intellectual property regulations vary from country to country, increasing the possibility of communication errors.
For example, in signing a statutory contract, the above differences may affect communication efficiency or misunderstanding and hinder the progress of work.
Opposition from domestic groups and organizations, such as trade unions, anti-globalization people, and resistance from internal employees, will affect the benefits of offshore outsourcing.
In addition, the political instability of the outsourcing target countries or the lack of mature operators will affect the business progress and confidentiality, which may lead to the investment of offshore outsourcing services.
Analysts pointed out that network operators have many choices and should not regard offshore outsourcing as the only solution to all problems. In some cases, as long as you improve a program (such as billing procedures), the benefits may be better than offshoring.
Regardless of the strategy adopted by network operators, offshore outsourcing is a complex and important business decision. Beforehand, it is necessary to carefully analyze the research, not only to understand the benefits and business opportunities brought by offshore outsourcing, but also to understand the relevant business risks.
Suitable for Business
The business content that is usually outsourced mainly includes information technology, followed by human resources, finance, and accounting.
Who is favored by global contractors?
India is currently the center of the IT offshore outsourcing market, with at least 80% of its global outsourcing business going to India. Other outsourcing destinations are in Asia, Europe, Africa and South America, including China, the Philippines, Russia, Mexico, Singapore, Ireland, Northern Ireland, Israel, South Africa, Eastern Europe and Pakistan.
The ranking of these countries is rather vague because each country has its own strengths and weaknesses.
According to McKinsey’s survey, offshore outsourcing India is by far the most favored offshore outsourcing business, thanks to its combined cost and quality advantages. Ireland and Israel can provide good infrastructure and multilingual talent, but the cost is too high.