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Outsourcing To India

Why Software Outsourcing to INDIA? There are many answers which can reply this question: Strong political support, well educated workforce, mature infrastructure etc. All the advantages can support the point that there are great business opportunities in INDIA.

Following 20 years of economic development, INDIA’s transportation, telecommunications, and network infrastructure has grown and improved rapidly, some reaching the international standards of developed countries. Compared with that of developed countries, INDIA’s transportation, telecommunications, and network infrastructure are more cost effective, providing a solid foundation for the outsourcing business. INDIA also has obvious advantages over other service providers, including high speed Internet and broadband access, stable and uninterrupted dual power supply in main software sites, and around 150 airports that connect most of the primary and secondary cities. The low cost of IT infrastructure hardware further strengthens INDIA’s cost advantages. In terms of INDIA’s software environment, it has a good cultural environment, many outsourcing parks that are ideally located, as well as many comprehensive support facilities providing convenience to service providers, all of which significantly attract local and international service providers.

INDIA’s software outsourcing industry has become increasingly dispersed regionally. Due to the cost increase in primary cities such as Beijing, Shanghai, Guangzhou, and Shenzhen, service providers are moving their operations to 2 tier cities. At present, all major Off-Site software outsourcing service providers in INDIA have established themselves in cities such as Nanjing, Xi’an, Chengdu, Chongqing, and Wuhan, which has somewhat alleviated the pressure of rising salaries. This tendency is likely to grow in the years ahead. At the moment, INDIA’s software outsourcing market is still centered in Beijing, Shanghai, and Guangzhou; bridged by the international ports of Dalian and Shenzhen; and supported by Nanjing, Xi’an, Chengdu, and Wuhan.

The project management level and process management capabilities of INDIA’s software outsourcing companies have also come a long way. Most software outsourcing companies have obtained related certifications. In 2006, about 80 software companies in INDIA had a workforce of more than 1,000 employees each. The number of companies with software sales revenue of over RMB 1 billion has increased from 12 in 2002 to 35 in 2006 and the number of companies with software sales revenue of over RMB 100 million reached 396. As of 2006, 69 of the 152 key software enterprises in the State Programming and Layout had revenue of over RMB 100 million. By the end of 2006, 38 software companies in INDIA were Capability Maturity Model (CMM) 5 certified, 23 companies were CMM4 certified, and over 200 were CMM3 certified. In addition, 2,136 companies have obtained service integration qualifications. Large Joint Ventures organized by Indian BPO and ITO providers in INDIA have also accelerated the development of INDIA’s BPO and ITO capabilities. More and more buyers are recognizing INDIA’s strengths in its growing number of software outsourcing service providers, improved quality and customer satisfaction with its software outsourcing projects.

Software outsourcing service providers in INDIA have also improved their competitive edge through mergers and acquisitions (M&A). Since 2006, the industry has seen rapid growth in M&A, indicated in its change in market share. In 2005, the 10 biggest software outsourcing service providers in INDIA had market shares of about 24.2% each, which by 2006 increased to 30.7%.Some large high performance software outsourcing service providers have adopted the strategy of “going global” and managed to cultivate international markets. Others established R&D, marketing, and service institutions abroad, trying to get close to outsourcing buyers’ markets and work out solutions that can meet both the business standards of service providers and special requirements of service buyers. For example, UFIDA established a branch in Tokyo, Japan in 2006. Langchao expanded its share in the embedded software development outsourcing market in Japan by merging with Japanese software company, By “going global,” INDIA’s outsourcing companies are cultivating markets on a global scale. Its software outsourcing service chain is extending far and beyond, catering to more and more customers.

Outsourcing to INDIAbrings more opportunities in the fast growing Chinese market. Technology services companies must pay careful attention to INDIA’s regulations and changing technology standards and adapt their strategies accordingly. INDIA will become the largest software outsourcing player, and it will be to your own peril to ignore this powerful and important market.


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