Outsourcing involves migration of all or some business functions to a third-party provider that conducts the activity based on a set of predetermined performance metrics. Typically, the functions chosen for outsourcing are not critical to a company's core competencies or market differentiation.

According to a survey carried out at the 2001 Outsourcing World Summit by Michael F. Corbett & Associates, the top reasons cited for outsourcing are reduction of costs & increased focus on core competencies.

Companies of all sizes are adopting outsourcing in large numbers. Not only has the amount of outsourcing increased steadily over the years, mid-sized companies now lead the outsourcing trend along with larger companies.

Offshore outsourcing offers a number of advantages compared to onsite and near shore local outsourcing:

Success of software services outsourcing from offshore centers has consistently proved that they are competitive in quality, and lower in costs.

In the last few years, India has emerged as one of the preferred destinations for outsourcing. A large number of Fortune 500 companies including General Electric, British Airways, and Dell Computers, amongst others, have already chosen >India as a base for their global back office operations.

Smoothgreen possesses a rich knowledge base of outsourcing vendors in >India. We help our clients save time, effort, and money required in finding a right outsourcing partner for their needs.

Some of the main drivers that make India a preferred location are:

Policy Enablers

• A task force for developing a world-class knowledge-based outsourcing industry has been established with full government support
• Duty free imports of capital goods
• 100% tax exemption on export of IT Services

Regulatory Enablers

• 100% foreign ownership permitted in the BPO Services industry unlike other sectors where foreign ownership is restricted
• Software Technology Parks (STPs) established to provide ready-to-plug IT infrastructure and single window clearance for all regulatory compliance issues

Resource Base

• English is the standard medium of instruction
• Indian universities produce over 122,000 engineers every year against 63,000 in the U.S.
• Base of graduates has grown from 11 million to 14 million over the last 5 years, at twice the rate of the previous 10 years
• Increasing emergence of private computer training institutes - over 1 million trained users available
• The unique geographical location (12-hour time-zone difference) enables Indian companies to provide 24x7x365 level support

Cost Advantage

• Call center rates in the >US are around US$28 per hour (Source: Dr. Jon Antons's Benchmark Study)
• Typical rates in >India for voice-based support are in the range of US$12-24 per hour; the rates for web-based (email or chat) support are around US$7-12 per hour (Source: Deutsche Bank, ITES Report)

Reputation for Quality

• Out of 23 software companies in the world that have achieved the prestigious SEI-CMM Level 5, 15 of them are Indian
• Six Indian company has achieved the highly sought after COPC-2000® certification
• India will soon have the highest number of ISO-9000 companies in the world (Source: NASSCOM)

CHALLENGES:

IT Process outsourcing (ITO), though inevitable is not without its share of challenges. These challenges are especially daunting for the mid-sized organizations. Most mid-sized organizations rarely have the in-house expertise required to make an outsourcing relationship successful in the long-run.

Some of these challenges include:

• Needs Assessment - necessitates the ability to look at current process with a fresh perspective in order to decide what to outsource and what not to.
• Finding a suitable service provider -requires a thorough knowledge of the vendor landscape including their capabilities, delivery processes, quality of work and ability to innovate. Collecting and analyzing this information, especially about offshore vendors is a time consuming and complex process.
• Measuring the value of an outsourcing relationship - Contract and service level agreements (SLA) formation require technical, legal and process expertise.
• Control over the outsourced process - balance between control and flexibility requires local presence at the vendors location as well as knowledge of the disparate cultures
• Managing uncertainty and mitigating risks - requires the formulation of an alternative strategy simultaneously while setting up the outsourcing relationship, and planning in advance for business process migration to a second vendor in the event of failure

Success of software services outsourcing from offshore centers has consistently proved that they are competitive in quality, and lower in costs.