Outsourcing to India: Some practical tips

Filed in archive Point of view on September 4, 2006

India is clearly the leading location for offshore outsourcing in the world. It has an articulate, educated workforce, low level of wages, and strong support and facilitation from government side.

On the other hand, companies considering offshore outsourcing face many important decisions, particularly selecting selecting a local vendor. These issues motivated me to write this article about issues to have in mind when outsourcing to India. Here are my tips:

- Seek the advice of an experienced outsourcing consultant: The cost of failure can be high so asking an experienced consultant can reduce the risks. The National Association of Software and Services Companies (NASSCOM) is probably the best place to begin. It provides a Top 20 list of Indian service and software exporters.

- Ask yourself "What is the trade-off between anticipated savings and operational risks for our company?": This is an important question because in the first step, it gives you the answer whether you should pursue offshore outsourcing or not and if the answer is positive, in the second step, it guides you through the suitable model of offshore outsourcing. There are different options for outsourcing: the company can start its own offshore organization instead of outsourcing (like Dell), it can get the service from Indian IT service organizations such as Wipro and Infosys (like IBM) or Global BPO firms and consultancies such as Convergys and Accenture. You can also go for a hybrid approach like Microsoft. The type of your strategy seriously depends on the answer to the question and the amount of control which you like to have over your operations.

- To find a supplier, determine exactly what operations your company is going to outsource: Then, you can immediately start working with potential vendors. One approach is to arrange a conference where you present the objectives of your outsourcing initiative to all prospective suppliers at once. Then schedule follow up meeting with individual suppliers who are interested.