.......By Vishal Patil
In the eighties and nineties India witnessed an era of brain drain wherein talented people from India were relocating to the western countries for higher education, earning money and getting recognition for their talent. Of late there have been talks about reversal of the trend. Due to Outsourcing, India has become the hottest destination for jobs now.
The story of foundation of Brand India in IT goes back to early 1980's. It started off with the Indian professionals migrating to US and Europe for better job prospects and lifestyles. Gradually these individuals started creating their mark in the western corporations. Some of them became excellent engineers, scientists, teachers, doctors, whereas some emerged as entrepreneurs. That is when India started getting recognition for being a home for upcoming, hard working and intelligent human resources.
In the late nineties western computerized corporations were bugged by the Y2K problem. Indian companies made the most of the opportunity and sent lot of IT professionals Onsite to help the corporations resolve it. It was also an era of dot com boom wherein the internet witnessed astounding growth. Unfortunately the bubble bust and there was a massive recession in the west. However by that time world had realized the benefits India could offer to IT and ITES Industry. This in turn started a massive outsourcing wave in order to cut costs. And since then for Indian IT/ITES companies, there is no looking back.
Gradually Indian companies showcased their capabilities in developing and managing complex IT Applications. Today almost everything that is related to IT can be and is being outsourced to India. IT Applications Development and Management, Product Development, IT Infrastructure Management and Consulting are some of the major areas of outsourcing to India.
IT Application Outsourcing
IT Application Development and Maintenance outsourcing was the earliest wave in the IT outsourcing. Indian companies employed resources, trained them when required and started building capabilities of the companies. Indian IT companies worked on software projects that were outsourced by global corporations. The projects involved development of IT Applications and Management of IT Applications of western corporations.
Initially the focus of the companies was on technology using which the IT Applications developed. Gradually most of the companies started looking at technology as one dimension and added another dimension called Industry Verticals to their corporations. The industry vertical means the sectors of industry that the IT companies cater to. These include Manufacturing, Banking, Insurance, Financial Markets, Retail, Chemical & Energy, and Healthcare and so on.
In addition to building their capabilities in various technologies the Indian IT Companies built knowledge base on the industries as well. Because of this, companies leveraged upon mix of Domain and Technology knowledge. This helped them in slowly moving up the value chain by getting involved in larger and more complex application development and maintenance.
Today as the industry has matured, the depth and breadth of capability that Indian Professionals possess are profound. Indian professionals are truly global and develop and manage highly complex applications requiring in depth knowledge of the individual sectors.
IT Infrastructure Outsourcing
IT Infrastructure Outsourcing is new compared to Application Outsourcing. In the earlier days, due to requirement of physical intervention in managing IT Infrastructure, the work was not outsourced by the companies. Today most of the IT Infrastructure can be managed from offshore using tools that give remote control over the IT Infrastructure. Only minimal human resources are required onsite to handle activities requiring physical intervention.
Companies like HP, IBM, HCL, CSC, Wipro, and TCS are already major players that manage IT Infrastructure of hundreds of their clients from India. Several other companies have included this service in their portfolio and gradually trying to make their mark in this area.
IT Help Desk, Level 1 to 4 support can be offered to any company in the world from anywhere in India. Thanks to the telecommunication network, internet and remote control access to the IT Infrastructure; now any company in the world can concentrate better on their core activities by outsourcing their IT Infrastructure to those companies that are better skilled for it.
Design, Deployment and Management of Networks of varied technology, servers of different vendor, databases, desktops, telephones, and printers are some of the offerings in IT Infrastructure space. Currently this sector is growing very fast since several global corporations are outsourcing their work to India.
IT Product Outsourcing
India has been home of several innovative, goal driven and hard working entrepreneurs. Some Indian IT companies focused on development of innovative and value added Products instead of getting into services sector. However very few companies became successful in the product development area.
Global corporations realized the potential of Indian IT Professionals. Most of the western Product Driven companies now have their operations in India. The companies utilize the technically superior people having deep domain knowledge for development of new products and services.
Cost advantage is one of the benefit that is offered by Indian resources to such companies. Reduced time to market is another important advantage. No wonder all the global product and services majors including Google, Yahoo! and Microsoft have started their operations in India.
IT Consulting Outsourcing
IT Consulting can be considered to be one of the highest levels of work done by Indian Professionals in the value chain. Companies like IBM, Accenture, Infosys, Wipro, and McKinsey have their presence in IT Consulting area in India.
Designing complex solutions for the clients, enhancing the existing applications, optimizing the IT investments, integration of the legacy with new technology, ERP, SCM, RFID are some of the important areas where IT Consulting work is done for several of the Fortune 500 companies from India.
Though this sector employs lowest number of resources now in India, it is expected to grow significantly in near future. As India Inc. climbs up the value chain, consulting can be an important area where Indian talent can deliver great value to the global corporations.
Animation and Gaming Outsourcing
India has a vast pool of commercial artists who are trained in various 2D and 3D animation products. Hence outsourcing animation and gaming work to India makes the most sense today.
India has been the hot spot for IT outsourcing for more than two decades. Indian IT industry has matured over this period and Indian IT companies have delivered value to thousands of customers across the globe. Indian professionals have already proven their skills in all the areas of IT.
The National Association of Software & Services Companies (NASSCOM), India has identified animation and gaming to be the next thing for outsourcing to India. According to NASSCOM study, worldwide animation and gaming market is very large and is growing rapidly. They also mention that India is expected to play a major role in the animation and gaming outsourcing area.
Early adapters of this outsourcing wave will certainly get cost advantage over their competitors. Time to market being another crucial factor apart from cost, can be reduced by engaging right talent in right numbers from right people.
Animation work requires a combination of artistic flair and usage of IT products for 2D and 3D animation that can be used in every creative field today. Some of the applications of animation are mentioned below:
•Online and Mobile Game Development
•Animated Advertisement Development
•Animation for web sites and logos
•Animation for screensavers and wallpapers
•Character Animation
•Digital Graphics Editing
•Animated Presentation Development
Business Process Outsourcing
Business Process Outsourcing (BPO) has been a key driver in the growth of the Indian IT Enabled Services sector. The sector witnessed tremendous growth over past few years (approx 30-40% CAGR). The industry processes and practices have matured over the period. The companies have diversified into several areas catering to almost every sector of industries. Today companies offer wide range of services right from HR, Payroll, Accounting, Insurance and Banking back office processing, Help Desk, and Customer care, sales and so on.
Several Indian IT Services companies entered BPO segment due to high growth prospects and as an avenue of diversification. Of late the market has cluttered to large extent due to entry of several small players in the sector. The quality of service offered by these small enterprises is an issue. However they continue to exist because of the low price they charge.
One of the difficulty faced by the industry is lack of skilled resources in the market. Though India can provide large amount of English speaking resources, the high growth rate of the sector and customers demand for quality resources, has made it difficult to keep the demand and supply in equilibrium. The government and some of the companies are already taking proactive measures in order to deplete the demand-supply gap. Some of the measures by government include organizing forums, increasing industry awareness and education. On the other hand, companies are setting up training centers wherein they can offer all the necessary training to the resources including voice and accent and cultural training that teaches how to deal with people from different countries.
Infrastructure costs being high in the tier 1 cities, has put compulsive pressure on companies to enter low cost destinations i.e. tier 2 and tier 3 cities. However the lack of adequate telecommunication infrastructure is still being a hurdle in some of the small cities. Lack of willingness of human resources to migrate from the Metros to small cities can be another issue. However this can be offset by garnering local resources and training them appropriately.
The sector has witnessed several acquisitions over past few years. This trend is expected to continue for a few years, since some more of the foreign players are looking for opportunities to enter India. Further, some of the tier 2 Indian IT companies are considering diversification following the suite of the Indian IT Majors.
Two marketing strategies might emerge as result of the competition at this stage in the sector. The bigger players might try and portray themselves as turnkey or end-to-end solution providers for BPO. On the other hand the smaller companies might have to operate in a niche segments.
Knowledge Process Outsourcing
Knowledge Process Outsourcing (KPO) is the next step in moving up the value chain for Indian ITES industry. The term KPO is perhaps the hottest buzzword in the ITES industry today. In simple terms, KPO is the outsourcing of a knowledge driven processes of a company to a low cost destination that will add value to the outsourcer. In contrast to BPO which is more of process and less of knowledge driven, KPO can be considered to be providing more strategic than tactical solutions.
Today in India, KPO is in the same phase where BPO was some years back. Entrepreneurs, Venture Capitalists and Foreign companies consider KPO to be very lucrative opportunity to enter now. Reasons being the high growth potential, high profit margins and availability of knowledgeable resources in India.
Following the suit of IT Outsourcing and Business Process Outsourcing, Knowledge Process Outsourcing has been evaluated to provide enormous job opportunities in India. Since the stalwarts of Indian IT and ITES industry have been able to successfully tap the opportunities earlier, it won’t be difficult for them to leverage upon their experience and tap the KPO opportunities as vigorously as possible.
Some of the world's leading investment banks like JP Morgan, City group have started outsourcing their equity research work to India. Several others are poised to follow the suit respecting the value addition being provided by the knowledgeable pool of Indian professionals.
Amex, a leading bank of the US has outsourced part of its credit/debit card data analysis work to India. The Indian analysts coming from esteemed institutes like IITs and IIMs having profound analytical caliber are offering the outsourcer value for their money.
Due to availability of better communication backbone, it has now become easier to provide training from India. Trainers from varied fields can log on to the internet, use VoIP etc to offer real time coaching to students from any part of the world at much cheaper rates than that available to them locally.
Various law firms are outsourcing some of their legal functions to India. Pharmaceutical companies are outsourcing part of R&D and getting it done from Indian researchers at much cheaper rate. Market research firms are outsourcing their data analysis work to Indian resources that are apt in doing that work. These are just a few examples of KPO offerings, there are and in future can be astounding opportunities in this area for India.
It is expected that companies from various sectors across the globe will continue to outsource their high value activities to India and reap the benefits such as low cost, faster time to market and quality output. This means growing number opportunities to create wealth for entrepreneurs, venture capitalists and tremendous amount of job opportunities for people from India.
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