India is the leading country for offshore outsourcing

India is the leading country for offshore outsourcing. The offshore outsourcing industry started in India and it has been able to grow the IT and BPO export sector to $47 billion and capture more than half the offshore outsourcing industry. That is not to say that India does not have challenges or is the best location for every offshore outsourcing effort, but it has an unparalleled history and size.

The Americas and Europe are the largest customers for the Indian outsourcing industry and account for 60 percent and 31 percent respectively of IT and BPO exports. The largest vertical sectors are financial services (41 percent), high-tech/ telecom (20 percent), manufacturing (17 percent) and retail (8 percent).  In 2011 the IT-BPO industry currently employs 25lakh people out of which 835,000 are employed by BPO exports industry.

IT and BPO services outsourcing first started in India in the mid 1980s. The large, English speaking, low-cost workforce was the main attraction. The industry grew rapidly through the 1990s aided by the dot com boom and IT upgrades to prepare for potential Y2K bugs. The 2000s saw similar growth with work moving to India in down cycles to help companies cut costs and in boom times to capitalize on the readily available talent.

The 2008-2009 global recessions has had a negative impact on outsourcing growth in India, but the sector is experiencing a turn-around in 2010. Many US and European companies are still cautions about the speed or staying power of the 2010 economic recovery and thus are looking to maintain a low cost base in locations such as India. We expect IT and BPO outsourcing in India to bounce back to double digit growth rates in 2012.

India has been the preferred outsourcing destination for most IT companies in UK and USA, mostly because of its affordable labour, English speaking workforce and stable infrastructure. 

The services sector in India contributes as much as 52% to the GDP growth and includes BPOs, KPOs, IT companies, ITeS etc. Due to the economical crises in America and European nations, the Indian outsourcing industry has evolved. This is because global IT companies are cutting down on costs and are seeking more cost effective solutions by seeking cheap resources. These include several changes in corporate behaviours such as staff reductions, bringing in new decision makers, better payment management and simpler value propositions.

Of course, changes in pricing trends see American and European companies deflating pricing for globalization services. Large companies, especially those that work on long term engagements such as TCS, Satyam, Wipro, etc. are not adversely affected. In fact, Indian IT services companies will prove beneficial to recession hit countries due to their ability to compete better. Business relations between India and these nations will improve, as a result.

Currently, the Indian economy is one of the largest emerging economies in the world. It is commonly grouped with Brazil, Russia and China as part of the BRIC countries that are having an increasingly important impact on the global economy.  The gross domestic product, measured by current exchange rates, hit $1.2 billion in 2008.  However when calculated using purchasing power parity, the economy is estimated to be about $3.4 billion, second of all top outsourcing countries.