India is a good provider of IT outsourcing services, companies

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Offshore Outsourcing in Perspective

During the recent times, there has been an unprecedented attention towards offshore outsourcing. The customer and provider companies; the reports and recommendations of consultants; the Western media all are much exited over its prospects. Some say that it is one of the best ways to improve business performance today. But the critics point out it as a ploy to seek short term gain at the cost of employees and customers.

Now, there is much information and experience available to make a careful review of the situation and put the matter in perspective and one can arrive at the following conclusion:

It cannot be denied that offshore outsourcing provides an opportunity to reduce cost and improve other aspects of business operations.
The benefits are not easy to yield and needs careful planning and implementation by the management.
The impact on domestic employees may not be always bad.

The Reality: as experienced by Procter & Gamble.

Though there are some cases of companies moving their back office operations offshore, the case of consumer product giant Procter & Gamble will provide a clearer picture.

In 2001 P&G began a pilot global sourcing program for its IT work, particularly software development, with the goal of creating a $100 million worldwide capability that could be leveraged on-demand by its individual business units. A small portion of work was relocated to low cost P&G locations in Poland and Philippines. Another few positions were consolidated and taken offshore through outsourcing.

It was revealed that offshore labour rates were about 1/5th of those in US or any other advanced economies. It also found that there were competitive rates offered by outside organizations to grab P&G’s work.

Another revelation was that highly educated and well trained individuals in these countries were extremely motivated to work hard to improve their standard of living. They often go beyond their working hours and their work time is scheduled to maximize their productivity. Thus, rates, competition and work ethic contributed to create the offshore cost advantage.

Another advantage, though not directly dependant on offshoring, was found. P&G was able to build a dynamic operating structure. Resources could be added or removed quickly; the workforce could be moved at a short notice and the programme centralized purchasing for skills that could be used between multiple business units. The overall standard increased with the objective evaluation of the provider’s processes. The company actually saved a small amount in the very first year.

India provides large number of offshore outsourcing services mainly in IT sector. There are so many companies in India doing outsourcing jobs with developed country. Recent trend shows India is number one offshore outsourcing provider country in the world.

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In 2001 P&G began conduct global outsourcing program for its IT work for reduce cost of the company through outsourcing

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