This is the age of globalization. The vast earth is no longer unfathomed. We can reach every corner of the earth within a few hours due to excellent modern communication. A person sitting in India can talk to another person sitting in Canada. The revolution in telecommunication has brought the people of different parts of the world closer. Taking the advantage of this revolution, the large multinational companies thought to make profit in their business in a new way. They started to outsource a part of their business in other parts of the world where the manpower is efficient and cheaper. The developing countries like India, China, Mexico, Philippines were the obvious choice as there is no dearth of talent and cheap manpower here.
China, Singapore, Philippines, Taiwan took the lead in outsourcing of manufacturing the hardware parts while India carved a niche in the software outsourcing process. China remained behind in the software outsourcing field because it does not have command over English. English is not taught in the schools of China as it as taught in India. The British had ruled India a century ago, so the influence of English language remained throughout India. It is taught as a second language in every Indian state. There are many English medium schools in India where the medium of instruction is English. Students coming out these schools can talk in English smartly. Almost all big multinational companies are located in the USA, England and other countries of Europe and America where the medium of instruction is English. Since there are many English speaking people in India, many large multinational companies have outsourced a part of their business to India.
The types of processes outsourced are Customer Support, Technical Support and Backend processes. India has begun to be known as the center of Back office operations for the entire world. Many large multinational Banks have decided to shift their back office work to India. HSBC, Aviva Life Insurance, ABN Amro Bank have announced that they would recruit thousands of Indians in their Call Centers, which have been set up in cities like Bangalore, Kolkata and Delhi. The Call Center business has set a new era for global business. While the big companies can concentrate more on their business by drastically cutting their maintenance costs, the educated and well versed youth of developing countries like India, Mexico can earn some quick money and become a part of international business. There are about 4 lacks people working in different call centers in India.
This is the age of liberalization. Almost all countries of the world are now following the path of liberal economy. They have come to realize that it is the only way of development. The mobile phones manufactured in China are sold the world over similarly the software developed in India is utilized in the entire world. Thus a sense of mutual benefit has developed in the companies across the world. The governments of many countries have allowed the multinational companies to conduct their business in their own way in different parts of the world so that the people can get benefit in one way or the other way. India opened its gate for the multinational companies in the nineties, since then Indian economy has been growing by leaps and bound. The big companies have set up their business centers here and as a result the business process outsourcing has generated millions of dollar for India. The multinational companies have got good service and have been able to cut down their cost, thus gaining the other way.
Reasons and advantages of outsourcing
Cost Benefits – In many call centers in the USA and Europe labor cost are the main operating cost, but in India it is just a fraction. In the U.S. a call center employee can expect $20,000 per year for answering customer queries over the phone but in India the cost can come down to $2,000 per year, which is 10% of the U.S. Cost. The companies have saved millions of dollar from this cheap workforce.
Skilled manpower- Most of the call centers in western countries recruit high school graduates for their work but in India they can easily get graduate students as each year millions of students graduate who can speak English very well but can not find high paying jobs. As for India the call center jobs are well paid, the employees take it as their full time job, whereas call center jobs are still considered as part time jobs in the west.
Taking all these facts into consideration, the companies have got phenomenal success in all respects while outsourcing their processes to India. This has opened the gate for more and more processes coming to India. Insurance, Banking, HR, Mortgage, Finance and Accounting are some of the most popular off shoring processes. By 2008 HR will be $40 billion market, while Finance & Accounting will be $20 billion market.
Some of the top companies of the world who outsource their business are:
Convergys, Dell, GE, American Express, Amazon, Sprint and many others.
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