Bring Down the Cost of Outsourcing

Bring Down the Cost of Outsourcing

India is being considered as the number one destination for companies that want to outsource their business processes. This is partly because of the cheap labor at India. However, the wage rates in India have been rising recently because of the saturation of the market by the outsourcing industry, thereby affecting the level of cost of India’s outsourcing customers. This will have serious effects on the viability of the said industry in India, as well as the development of this industry in other locations all over the world, most notably, in Southeast Asia and in Europe.

Because of the increasing costs of doing business in India, particularly in Bangalore, companies that do business there are now looking at other countries and locations so that their costs would be kept low. Actually, even Indian corporations are now setting their eyes to other countries so that the level of their profits will remain and their customers would choose to stay with them. By employing this strategy, the companies are able to diversify themselves and reinvent their manner of doing business, thereby winning the loyalty of some of their clients.

Some analysts have come to understand that Indian companies tend to show off only in the beginning. As soon as they have garnered the experience in the industry, they tend to pack up and look for alternative locations in other cheap labor countries in Asia and even in Russia.

The strategy of global giants, however, has been similar. Accenture, Genpact, IBM Global Services and other similar corporations have been gathering their talents from all over the world so that they can harness what a particular location can offer to the rest of the world. EDS has been cited by BusinessWeek that it is working with Continental airlines in several programming and software development projects. Low cost regions such as India and the Philippines are being cited as the most dominant areas in which these big corporations are utilizing in their efforts to promote the outsourcing industry.

Increasingly, however, companies are realizing that cost considerations are not everything. What they truly need are locations that do not have significant time zone differences. Furthermore, the economic disparity should not be very keen as well as the language barriers. As a result of this, there are regions in Europe that are now gaining prominence. Among them is Bucharest, Romania. With Europe taking center stage in the outsourcing industry, there will be a number of changes that will take place.

The issues of intellectual property rights are now slowly being addressed by companies that are engaged in outsourcing. In fact, some companies have removed the USB drive feature so that employees could not easily get files and send them to unauthorized locations. There are a number of concerns with the outsourcing industry, however. Workers and employees in the United States as well as in other areas in North America are finding it more difficult to compare with their overseas counterparts that are being paid less than half of their wages. On the whole, however, moving beyond India may be a big step in making the industry more diversified and more efficient.