Is Indian Offshoring an advantage for

Eternity- For the Motion

An NEP Presentation by ILLUMINATI- FG2 Fall Winter 2008 Batch

“ We will create a system of education that will not change their colors, but will make them white in their thinking”

-Lord McCauley (19TH century)

Seed to Tree

Birth of Offshoring

Entered the language in 1980s.

Introduced by information system trade press.

Outsourcing Coined to describe growing trend

of transferring information system out of house to

3rd party company.

Source: Indian offshore Advantage by Ian Hunter

Offshoring is an extension of outsourcing where

relocation of work moves across geographical

organizational boundaries.

Offshore processes can be handed off to third-

party vendors or remain in-house.

Advantage of lower-cost labor in another

country. Outsourcing

Outsourced off shoring

In-house off shoring

Idea behind Offshoring

So that companies can focus on their

core activities and maintain control over

their strategic elements.

To increase profit margins.

To seek advantage by offshoring work to

countries which are cost effective.

Idea meets Advantage India

India Rising

Second headquarters of major companies like

GE, British airways etc..

Boeing 787 handed over cockpit maintenance

work to HCL Technologies.

Morgan Stanley hired Indians to perform

analysis of stocks.

Source: Boeing.co.in , Businessweek.com

Indian Offshoring Advantages

Under 3 Main Heads

Availability of large talent pool

Low cost

Fast turnaround time

Emerging Competition

India Philippines

India’s edge over Philippines

India leads Offshoring with 35% market share as

compared to 15% that of Philippines in 2008.

In terms of graduates at 480, 000, Philippines

lags behind India’s 30, 00, 000.

Challenges faced by Philippines

a. Specialized skills,

b. Access to quality management talent, and

c. Talent migration

India’s edge over Philippines

Philippines lags behind India when choosing an

Offshoring location, such as:

a. Risk

b. Infrastructure,

c. The availability of vendors, and

d. A paucity of skilled middle managers.

India’s edge over Philippines

India China

Points of difference

Human Resource and Knowledge

Management

Points of difference

Perception is Reality

China may fall victim to its own success

Cross Country Constraints

Industry

Growth Investment

ITES – Information Technology Enabled

Services.

BPO – Business Process Outsourcing.

KPO – Knowledge Process Outsourcing.

RPO – Research(Recruitment) Process

Outsourcing.

HRO – Human Research Outsourcing, etc.

ITES - outsourcing of processes that can be

enabled with information technology and

covers areas like finance, HR,

administration, healthcare,

telecommunication, manufacturing etc.

BPO-The contracting of the operations and to a responsibilities of a specific business function third-party service provider.

KPO- knowledge and information related work is carried out in a different company or by a subsidiary of the same organization.

RPO -Is a form of outsourcing where an employer outsources transfers all or part of its recruitment activities to an external service provider. HRO - Offer an array of Human Resource

Management solutions designed to reduce the costs of traditional human

Resource models.

Medical transcription

Customer support services

Technical support service

Exam result evaluation

Insurance processing

New Business/ Promotion

Policy Maintenance/ management, etc.

Direct employment to 1.5 million

professionals

There is a positive relation between high

skilled services and GDP.

It has led to the enormous infrastructure

improvements.

It has led to the development of SEZ.

Petroleum products

Others

Exports

Occupation Structure

Economic survey 2007-08

Offshoring is profitable for Indian ITES in the

case of rupee depreciation.

Engineering goods and IT services

contributes 30% to Foreign Inflows in 2007-08.

The competition for talent is heating up.

Harmonic political relations with other

countries.

RECESSION IN USA AND

OFFSHORING

WHAT IS THE CONNECTION ?

Will India sneeze when US catches a cold

?

Thanks to Offshoring

Offshoring is an integral part of the rising

tide in globalization

Its reputation for low-cost but high quality

work

Vast and growing IT labor pool being

trained to support global client base

Offshoring to India – a propellant on the

US economy

It is the business of America to design and

innovate

Jobs off shored create jobs within the

country

US exports will be billions of dollars higher

in the long run

International relationships could influence

the Offshoring policy of new government

The Next Big Thing in Offshoring

Engineering design Offshoring

Increasing trend of us based newspapers

publishers Offshoring to India

The delivery models are well established

India is well positioned to become a back

office for America

Indian firms are generating thousands of

new technology jobs

Will it last till Eternity ? The reported death of Indian offshoring is

greatly exaggerated.

Productivity and scale.

Salary increases with Productivity

improvements

Multiyear experience advantage.

Vastly improved its IT infrastructure.

.

Leverage in India's university system.

Moving to tier-II and tier-III cities.

Will it all last till Eternity ?

Education on a rise in India.

• -560 universities and 13,200 higher education institutions produce

an estimated 14 million employable workforce—the largest of all

28 countries MGI has studied.

The private spending on education -expected to

increase 13% to 15%

• It is estimated that by 2011-12, it will surpass Rs. 100,000 Crore

from just Rs. 26,883 Crore in 2000-01.

(Source: Ministry of HRD, Government of India, 2006-2007).

Although China has increased expenditure on

education, it only accounts for 3.01 percent of

the GDP in 2006 (Source: Article in Beijing News.)

• Pune • Chandigarh • Ahemedabad• Jaipur • Rajkot• Kochi • Goa• Bhubaneshwar• Vishakapatnam

• Patna• Baroda• Varanasi• Nagpur

Most of the operation in 3rd tier cities

would be that of sub-contracting

Younger Population.

2/3rd CMM Level 5 organizations are

based in India.

Government Initiates.

Time Zone Difference.

NASSCOM Initiatives.

Will it all last till Eternity ?

When you offshore to India, you offshore to

world-class systems and quality.

Indian offshoring industry is at a growth

stage and the trend is expected to continue.

India’s unique set of attributes translate to a

sustainable position as an offshoring

destination which will last till ETERNITY.

Gaurav Kumar

Jugal Desai

Kshitij Arora

Niharika Goel

Rahul Mahajan

Rosy Walia

Sukhneet Wadhwa

Thank YouWe are now open to queries