Outsourcing: Boon or Bane for India

Over last few years, business process outsourcing industry has grown tremendously. Outsourcing
actually came to India long time back in eighties when many foreign airlines opened their back
office centres in India. Huge difference between Indian National Rupee and US Dollar and cheap
labour availability, who were willing to work in shifts (to provide 24 hours support to front
office), prompted multinationals to come to India to increase their profit margin.
Outsourcing flourished in India as it realised Indias needs also. Increasing population, poverty
and unemployment have always been long lasting issues for the biggest democracy of the world.
Limited government jobs and fistful of companies in India were not sufficient enough to create
ample job opportunities. Outsourcing came as a big relief to India. Good number of jobs was
created. Indian foreign reserve started increasing providing a boost to economy. People who
could not continue their studies after 12th standard, were also able to earn decent money, which
was a mirage earlier. Once upon a time, educated people were wandering on streets, now even
12th standard pass out was able to sustain a decent life style. I could remember, when we were
kids, we were often told to study hard by our parents and become IAS or other government
servant. With each passing year, qualifying a government service, even upper divisional clerk or
lower divisional clerk, became increasingly tougher. Probably population, with limited resources
and slow economy growth were the reason behind that. In that scenario, outsourcing was nothing
less than a boon for India.
But then, anything good comes at a cost. I do not know if I am qualified enough to pass such
comments, but my expressions are the outcome of what I have observed and studied on
outsourcing and Indian economy.
Many people have written on the cultural shock that Indian society has received with the advent
of outsourcing. Youth is moving away from our culture and values.. blah blah. I wont get into
that, rather I would like to draw attention to the gradual intellectual incapability and
complacency creeping into the youth of the nation.

Based on my professional experience, I can say that only left over work comes to Indian
software industry, which is labour intensive and does not require brain (with few exeptions as
well), for example data entry, software testing etc. If I try to draw an analogy between software
development works and constructing a multi-story building, the architecture, foundation and
design part take place in US or Europe, the finishing or patching part comes to India. We paint a
wall or do toilet/kitchen fittings, or if a wall was erected wrong and demolishing the wall and reerecting would cost more there, then it would be sent to us. This is absolutely my understanding;
please correct me if I am wrong. Such kind of work limits the learning curve as we do not get the
exposure of high end work, which ends at the point where outsourcing starts. Over to that,
todays youth tastes money right after 12th standard while working in call centres. This is the
time when youth passes through the transition phase of life. Instant money, with malls and pubs
around, are enough to drift him away from long term goals and ambitions in life. Many a time it
has been seen, that student intentionally left school after 12th standard as they found good source
of income in call centres. In future India can witness huge number of school dropouts which
would in turn affect Indian economy in many ways.
This outsourcing could be a big bubble in the making, which could shatter Indian economy in
coming years, probably 10 years or 20 years or even after that.

Outsourcing Boon or Bane

Introduction

To put it in simple words outsourcing is basically shifting the of jobs from developed countries
to underdeveloped countries. In the present world of cut throat competition, many companies in
the so called first world nations like the USA and UK, outsource or shift some of their jobs to the
so called third world or developing countries like India, China, Vietnam, Romania etc. Generally,
the jobs outsourced are back office jobs or research and development jobs. No one knows the
possible future implications of this phenomena, but most positive thinkers believe that this is an
evolution that had to take place and that this is a win-win situation for everybody.
Outsourcing is not a recent phenomena, but has been going on since years. Developed countries
have since long outsourced manufacturing jobs to countries like Africa, Latin America etc. But as
these jobs involved manufacturing of solid substances there had to be transportation and sifting
of the goods and this resulted in employment generation in a different way. But the outsourcing
being done today is IT based and hence no transportation is involved except for shifting of data
from one computer to another. And as no additional costs are involved, big companies wanted to
cash in on it and others followed suit, and all this seemed to happen in a very short time. Also
this resulted in no new employment generation as in case of manufacturing jobs. All these factors
have led to a hue and cry against outsourcing in developed countries.
When there was a shift in the economy from manufacturing jobs to IT related jobs, there were
oppositions and protests over job losses, but over the years people seem to have adapted to this
change. Experts claim that this will be the case for outsourcing also.
India - A popular outsourcing destination
The major reason that companies outsource is to get cheap and hard working labor, which does
not demand allowances and leaves and is ready to work that extra hour without much complaints.
India has become the most popular destination for outsourcing at present, because India promises
cheap and efficient labor and more than that, it has management friendly labor laws. The laws
are management friendly, as they are never followed. So the labor in India is in a way, at the
mercy of the management. The labor has nowhere to turn to except for the management. So
when a company wants labor they recruit them and when they don't, they downsize them, all at
their own will without any government intervention. Also the labor in India, where

unemployment is on the rise in spite of the outsourcing boom is ready to work extended and odd
hours without complaining or asking for a higher compensation.

Should The Indian Government Encourage or Discourage Outsourcing:

The Indian government has failed to conceptualize the complexity of the matter. The government
is very much in favor of outsourcing. But what the government failed to conceive is the fact that
depending so much on outsourcing can lead to disastrous results. At present around 2 lakh
Indians are employed in outsourced Call Center jobs alone. These people are in the age group of
19-25 and in most case are graduates starting from arts and science graduates to engineering
graduates. And why do so many graduates join a call center? Because they have no other decent
job to do. Call centers offer them a good work atmosphere and a decent starting salary. Although
there are many problems like, working in night shifts and odd hours, transportation during the
night, no benefits, bond or contract labor etc. But no one is bothered about them.
Even after this the unemployment rate in India is high. So what happens if suddenly outsourcing
is stopped or companies opt out against it to gain public support? There will be an increase in the
unemployment rate in an alarming way. Now the government will come under extreme pressure.
To avoid such a situation the government should try to generate jobs from within instead of
depending so much on outsourcing. The classy adverts which come in the newspapers, which
lure young students into taking up a call center job should be stopped. Proper awareness must be
generated in the public regarding outsourcing. The labor laws must be made stringent.

The Situation In The West:

The companies in the western developed countries are very happy to outsource. They get cheap
and efficient labor which results in huge cost savings for them. They can in turn use this cost
savings for expansion and in a way beating competition. But the people most effected by this
outsourcing are the employees of these companies who are being laid off in huge numbers. The

current situation is pretty grave. The people who get laid off have nowhere else to go. All their
experience will eventually be a waste as in every company, the back office jobs are being
outsourced. This leads to huge levels of hate generation among the employees and the public of
the developed countries in general, against countries like India and China. The popping up of
various websites such as "www.nojobsforinida.com" for instance is a best example of this.
Experts believe that this is just a temporary process and as time passes by people will learn to
live with it. The future will see the generation of new jobs and in the long run there will be no
more hue and cry over outsourcing.
The democratic party frontrunner senator John Kerry has made it an election point and has
promised to stop all outsourcing activities if elected. President Bush however is skeptical over
this matter. He has already said in one of his speeches that outsourcing is a win-win situation and
will bring benefits to America in the long run. With elections another nine months away, Mr.
Bush has ample time in his hand to make up his mind. So it will be somewhere around the month
of August -September which will be the crucial decision making time.
Outsourcing: Boon or Curse?

Outsourcing is nothing new. It has been practiced for decades. Industries such as retail,
automotive, and others have used the specialized services of contract organizations to drive down
costs and increase efficiencies. The pharmaceutical industry, however, has always closely
guarded proprietary projects, compounds, and processes and has only recently, in the face of
escalating costs and decreasing R&D productivity, warmed up to the idea of routine outsourcing.
Outsourcing in the pharmaceutical market is certainly on the rise, as evident by the rising
numbers of contract research organizations (CROs) and contract manufacturing organizations
(CMOs), both in the United States and in countries such as India and China. The types of
services offered have also intensified and diversified. Many equipment manufacturers and
reagent providers are also now including contract services as a part of their portfolio of offerings.
Cost-cutting definitely sparked this trend, but there is also increased pressure to do things fast

and to do it right the first time around. The other factor contributing to this growing trend is the
advancement in informatics technologies. The availability of better tools for monitoring quality
control and maintaining client confidentiality by preventing data security breaches have been
crucial in making companies feel connected and in control of the work being done at a
contractor's site.
This month's cover story by senior editor Patrick McGee profiles TAP Pharmaceutical Products
Inc., which has taken outsourcing to new heights. TAP owns no laboratories, relies almost
entirely on licenses and contract agreements, and functions almost like a virtual company. It
outsources nearly all elements of the pharmaceutical pipeline including drug discovery,
development, manufacturing, and clinical trials.
How successful is this outsourcing model? It seems to have worked well for TAP, but I am not
sure how likely other companies are to adopt a similar business model. TAP has been able to
maintain a rigorous control on the design and implementation of its goals by its contractors. It
also found this model useful when making go/no-go decisions because there is not much
emotional attachment to any particular project.
However, this business model is restricting because there are certain limitations with in-licensing
and outsourcing in terms of procuring compounds, pursuing therapeutic areas, or using specific
technologies and processes. A lack of emotional attachment can be both a boon and a curse. We
hear of numerous examples in the industry where management would have killed a research
project, that ultimately resulted in a blockbuster, had it not been for a champion who had
emotional ties to the project or compound and actively fought for its survival. It will be
interesting to see how the outsourcing trend evolves in the coming years.
Outsourcing Boon or Bane
by Mukesh

Introduction
To put it in simple words outsourcing is basically shifting the of jobs from developed countries
to underdeveloped countries. In the present world of cut throat competition, many companies in
the so called first world nations like the USA and UK, outsource or shift some of their jobs to the
so called third world or developing countries like India, China, Vietnam, Romania etc. Generally,
the jobs outsourced are back office jobs or research and development jobs. No one knows the
possible future implications of this phenomena, but most positive thinkers believe that this is an
evolution that had to take place and that this is a win-win situation for everybody.
Outsourcing is not a recent phenomena, but has been going on since years. Developed countries
have since long outsourced manufacturing jobs to countries like Africa, Latin America etc. But as
these jobs involved manufacturing of solid substances there had to be transportation and sifting
of the goods and this resulted in employment generation in a different way. But the outsourcing
being done today is IT based and hence no transportation is involved except for shifting of data
from one computer to another. And as no additional costs are involved, big companies wanted to
cash in on it and others followed suit, and all this seemed to happen in a very short time. Also
this resulted in no new employment generation as in case of manufacturing jobs. All these factors
have led to a hue and cry against outsourcing in developed countries.
When there was a shift in the economy from manufacturing jobs to IT related jobs, there were
oppositions and protests over job losses, but over the years people seem to have adapted to this
change. Experts claim that this will be the case for outsourcing also.
India - A popular outsourcing destination
The major reason that companies outsource is to get cheap and hard working labor, which does
not demand allowances and leaves and is ready to work that extra hour without much complaints.
India has become the most popular destination for outsourcing at present, because India promises
cheap and efficient labor and more than that, it has management friendly labor laws. The laws
are management friendly, as they are never followed. So the labor in India is in a way, at the
mercy of the management. The labor has nowhere to turn to except for the management. So
when a company wants labor they recruit them and when they don't, they downsize them, all at

their own will without any government intervention. Also the labor in India, where
unemployment is on the rise in spite of the outsourcing boom is ready to work extended and odd
hours without complaining or asking for a higher compensation.

Should The Indian Government Encourage or Discourage Outsourcing:

The Indian government has failed to conceptualize the complexity of the matter. The government
is very much in favor of outsourcing. But what the government failed to conceive is the fact that
depending so much on outsourcing can lead to disastrous results. At present around 2 lakh
Indians are employed in outsourced Call Center jobs alone. These people are in the age group of
19-25 and in most case are graduates starting from arts and science graduates to engineering
graduates. And why do so many graduates join a call center? Because they have no other decent
job to do. Call centers offer them a good work atmosphere and a decent starting salary. Although
there are many problems like, working in night shifts and odd hours, transportation during the
night, no benefits, bond or contract labor etc. But no one is bothered about them.
Even after this the unemployment rate in India is high. So what happens if suddenly outsourcing
is stopped or companies opt out against it to gain public support? There will be an increase in the
unemployment rate in an alarming way. Now the government will come under extreme pressure.
To avoid such a situation the government should try to generate jobs from within instead of
depending so much on outsourcing. The classy adverts which come in the newspapers, which
lure young students into taking up a call center job should be stopped. Proper awareness must be
generated in the public regarding outsourcing. The labor laws must be made stringent.

The Situation In The West:

The companies in the western developed countries are very happy to outsource. They get cheap
and efficient labor which results in huge cost savings for them. They can in turn use this cost
savings for expansion and in a way beating competition. But the people most effected by this

outsourcing are the employees of these companies who are being laid off in huge numbers. The
current situation is pretty grave. The people who get laid off have nowhere else to go. All their
experience will eventually be a waste as in every company, the back office jobs are being
outsourced. This leads to huge levels of hate generation among the employees and the public of
the developed countries in general, against countries like India and China. The popping up of
various websites such as "www.nojobsforinida.com" for instance is a best example of this.
Experts believe that this is just a temporary process and as time passes by people will learn to
live with it. The future will see the generation of new jobs and in the long run there will be no
more hue and cry over outsourcing.
The democratic party frontrunner senator John Kerry has made it an election point and has
promised to stop all outsourcing activities if elected. President Bush however is skeptical over
this matter. He has already said in one of his speeches that outsourcing is a win-win situation and
will bring benefits to America in the long run. With elections another nine months away, Mr.
Bush has ample time in his hand to make up his mind. So it will be somewhere around the month
of August -September which will be the crucial decision making time.
The Different Sectors in Outsourcing

As business realities change, an increasing number of companies are looking at ways to

minimize costs. Outsourcing non-core areas to a skilled vendor like Outsource2india can be a
viable alternative for them. Adopting this strategy can help the business reduce costs without
compromising on quality.

Today, businesses are outsourcing a diverse range of services. These range from the relatively
low-skill call center services to MARKET research and analysis, which requires expertise and
skilled workers. In addition, Finance and Accounting Outsourcing (FAO) is becoming
increasingly wide spread as is medical outsourcing. From healthcare providers
tosoftware developers, everyone seems eager to leverage the benefits of outsourcing.
Outsource2india different sectors outsourcing
An outsourcing expert like Outsource2india offers a wide range of services to suit varied client
requirements. These services can be classified into different outsourcing sectors. These include:
1. Call center outsourcing
Typically, BPO services include:

Inbound call center services These typically include answering services that are
available 24X7. Call center agents can also be trained to up-sell and cross sell services, take
orders, and provide information on the benefits and features of products/services

Outbound call center services These include services like telemarketing services, lead
generation services, and MARKET intelligence services

Technical helpdesk services This includes technical after-sales support for products
and services

2. Knowledge Process Outsourcing (KPO)

A KPO typically provides domain-based processes and employs advanced analytical skills and
business expertise, rather than just process expertise. Some research services include:

MARKET research and analysis These services help the business extract useful
information that reveals current trends and provides inputs for decision-making

Web-based MARKET research These services help collect information from

different websites. As compared to primary research where data is directly collected from
respondents, data is collected from secondary sources like government publications and
newsgroups

3. Data entry outsourcing

All organizations, whether big or small, have data entry requirements. Data entry outsourcing
can be divided into:

Online data entry These includes services such as compilation of data from websites
and e-books, updating online catalogs, and creation of databases

Offline data entry These include services such as offline data capture, fillings of
forms, forms processing, data entry from one format/version to another, MS Word document
data entry, etc

4. IT sector outsourcing
IT outsourcing typically includes outsourcing of software development. This may take the form
of end-to-end outsourcing where all activities related to design, development, and testing are
outsourced. In other cases, only a part or portion of the overall system is outsourced for
development. This is in cases where the client does not have the requisite skills or technology for
the development work.
5. Healthcare sector outsourcing
Medical outsourcing includes a diverse range of HIPAA compliant services. These include:

Medical transcription services These include services to transcribe information from

a variety of audio sources and file formats such as MP3, MPG, MOV, DSS, WMA, etc

Medical coding and billing services These services are delivered using popular billing
software like Medic and Lytec

Teleradiology services - These services provide 24X7 access to qualified radiologists

6. Financial sector outsourcing

Accounts outsourcing services include:

Accounting services These include preparation of FINANCIAL statements for the

statutory annual audit, cash forecasting services, and payroll services

Bookkeeping services These include preparation and maintenance of both day-to-day

books as well as monthly and quarterly accounts. It also includes preparations of different
kinds of reports like sales reports

Financial analysis services These include analysis of FINANCIAL information such

as FINANCIAL statements, portfolio structures, and offer documents

7. Engineering services outsourcing

These include a range of mechanical, civil, structural, and architectural engineering services:

Computer aided design (CAD) services to develop prototypes

2D drafting services

Conversion of paper drawings into a digitized format

Design and analysis for residential and industrial buildings

Architectural visualization services (3D rendering or 3D animations)

Services for evaluation and strengthening of deteriorating structures

Types of Outsourcing,Different Types of Outsourcing,Types of Outsourcing

Services
Different Types of Outsourcing
Introduction
Outsourcing is the process by which an organization contracts with another individual or
company to get some of its work done. Viewed this way, most organizations go for some kind or
other of outsourcing. Generally it is non-core aspects of the business that are outsourced.
The firms that offer the services thus required are called service providers or third-party
providers. Businesses may thus tie up with service providers for either individual processes or
whole projects or operations.
Outsourcing can be divided into two broad categories. They are BPO and KPO. Let us examine
how each differs.
BPO
In BPO (Business Process Outsourcing), a particular process task is outsourced. An example
would be payroll. BPO work could be either back office related or front office work. By front
office functions we mean customer oriented work like MARKETING , answering calls,
technical support and so on, whereas internal work like billing and purchase come in the back
office category.
Multimedia/ animation, book keeping, business consultancy, CAD/ CAM, call center, DTP, data
entry, proof reading and editing, typesetting, handwriting services, MARKETING , medical
billing and transcription, web design and development etc are all services that could be put under
the BPO category.
BPOs a boon or a bane?

Say BPO and the first thing that comes to mind is the high attrition faced by the industry.
According to current data, the business process outsourcing (BPO) industry in India employs
around 400 people every day with the people exiting from this sector being around 12% of the
total workforce. The presumption is that attrition is being driven by the dead end, boring,
repetitive work done in the graveyard shift.
Recent studies, however, show that contrary to general perception, most people who quit tend to
stay within the industry. And if they opt out, it is generally to pursue higher studies, while a very
small percentage quit due to night shifts. This shows that majority of the people still remains in
the industry and the high attrition rates facing the industry is largely a result of the huge supply
and demand mismatch, more than anything else.
the BPO sector is beginning to be addressed comprehensively as an industry and once it moves
beyond metros, there will be a better demand-supply situation for talent. The BPO
industry recorded export revenues of $ 6.3 billion during fiscal 2005-06 and is expected to touch
$ 8-8.5 billion during 2006-07. It provides direct employment to close to half-a-million people
and has been an industry that has been recording over 40% growth.
The recent Nasscom-McKinsey Report 2005 on the Indian IT industry says the addressable
offshoring market of BPO can go up to $120-150 billion from the current $11.5 billion. Even in
its projections of $60 billion in IT export revenues, it expects the BPO segment to contribute $
25 billion. Susir Kumar, CEO, Intelenet Global Services, says that the success of the BPO
industry has largely been a factor of quality manpower combined with sophisticated vendor base
and improvement in the local infrastructure.
The industry, which has been around 4-5-years-old, has also taken a faster road to maturity
unlike its counterpart, the software industry, moving up both in terms of scale and value
offerings. Voice-based and vanilla back-office activity has grown into sophisticated offerings like
analytical services, legal advisory, high-value financial transaction services among others.
Nasscom vice-president Sunil Mehta says there is a possibility of specialised BPO providers
appearing like an operator of industry-standard transaction or platform based services like credit

card processing. Nagarajan says that the rapid growth witnessed by the BPO sector will sustain
with continued interest from the buyer community.
Divakar Kaza, president, global HR, HTMT says, the industry has now reached a strategic
inflexion point where the rules of engagement will change as the industry matures. Having
established brand India in this sector, companies need to move up the value chain quickly, he
adds. For the people-driven business, the biggest talent pool for the BPO industry has been the
college graduates though this base has been widened. Chaudhry says that the industry has been
able attract people with professional qualifications like chartered accountants and MBAs and
there has been a broad change in perception among colleges, students and parents about BPOs.
The issue of expanding the scope of talent has also seen numerous companies reaching out
directly to the colleges and engaging them early so as to make them industry ready. This includes
introducing BPO curriculum in the educational institution as well as engaging the teaching
community on the various opportunities available to the industry.

KPO
As is evident from the description, BPO activities involve carrying out standardized processes
for the client. KPO or Knowledge Process Outsourcing typically calls for work that needs higher
levels of involvement from the worker. The worker has to employ advanced levels of research,
analytical and technical skills and has to make decisions of a higher order than BPO work.
Examples are pharmaceutical research and development, patent/ intellectual property research,
animation and simulation. Data research and analysis, legal services, content writing and
development and database development services. KPO industry is less older and mature than the
BPO sector.
Apart from BPO and KPO, ITO or Information Technology Outsourcing is another major
category. ITO is usually overseen by the CIO of an organization. However the CIO is often

called in to manage BPO and KPO operations where no significant IT skills are involved. This is
due to the expertise the CIOs would have developed in outsourcing negotiations.

The Advantages and Disadvantages of Outsourcing

What is Global Outsourcing?

Outsourcing is an allocation of specific business processes to a specialist external service
provider. Most of the times an organization cannot handle all aspects of a business process
internally. Additionally some processes are temporary and the organization does not intend to
hire in-house professionals to perform the tasks. Once the task is outsourced to the service
provider, he will take the responsibility of carrying out the tasks and maintaining the
organizations assets.
However prior to outsourcing any component of your business to a third-party vendor, it is
essential to understand the advantages and disadvantages of outsourcing. Although outsourcing
presents a variety of benefits to your organization, it could also pose difficulties if not outsourced
to the right service provider.
The most commonly outsourced streams of business include:

IT outsourcing

Legal outsourcing

ContentDevelopment

Web Design and Maintenance

Recruitment

Logistics

Manufacturing

Technical/Customer Support
Why do organizations outsource their business process?
The key factors which have led to a growing trend of outsourcing are

Lack of expert-labor in some portions of the business process

Availability of cheaper labor, whilst not comprising on the quality of output

Ability and feasibility to concentrate on the other crucial business process

These factors have specifically contributed to most of the outsourced partners across different
locations in the world. Expertise in communication capabilities, technical expertise and
favorable FINANCIAL packages are the most important advantages of outsourcing to India.

Advantages and Disadvantages of Outsourcing

Outsourcing most commonly known as offshoring has pros and cons to it. Most of the time, the
advantages of outsourcing overshadow the disadvantages of outsourcing.
The Advantages of Outsourcing

Swiftness and Expertise: Most of the times tasks are outsourced to vendors who
specialize in their field. The outsourced vendors also have specific equipment and technical
expertise, most of the times better than the ones at the outsourcing organization. Effectively the
tasks can be completed faster and with better quality output

Concentrating on core process rather than the supporting ones: Outsourcing the
supporting processes gives the organization moretime to strengthen their core business process.

Risk-sharing: one of the most crucial factors determining the outcome of a campaign is
risk-analysis. Outsourcing certain components of your business process helps the organization to
shift certain responsibilities to the outsourced vendor. Since the outsourced vendor is a specialist,
they plan your risk-mitigating factors better.

Reduced Operational and Recruitment costs: Outsourcing eludes the need to hire
individuals in-house; hence recruitment and operational costs can be minimized to a great extent.
This is one of the prime advantages of offshore outsourcing.
The Disadvantages of Outsourcing

Risk of exposing confidential data: When an organization outsources HR, Payroll and
Recruitment services, it involves a risk if exposing confidential company information to a thirdparty.

Synchronizing the deliverables: In case you do not choose a right partner for
outsourcing, some of the common problem areas include stretched delivery time frames, substandard quality output and inappropriate categorization of responsibilities. At times it is easier to
regulate these factors inside an organization rather than with an outsourced partner.

Hidden costs: Although outsourcing most of the times is cost-effective at times the
hidden costs involved in signing a contract while signing a contract across international
boundaries may pose a serious threat.

Lack of customer focus: An outsourced vendor may be catering to the expertise-needs

of multiple organizations at a time. In such situations vendors may lack complete focus on your
organizations tasks.
With all these pros and cons of outsourcing to be considered before actually approaching a
service provider, it is always advisable to specifically determine the importance of the tasks

which are to be outsourced. It is always beneficial for an organization to consider the advantages
and disadvantages of offshoring before actually outsourcing it.

BALANCING OUTSOURCING: BOON OR BANE?

Talking about outsourcing will right away bring up cheap labor in our minds. The fact is that
outsourcing is more than it meets the eye; it is not all about having your job done cheaply.
Outsourcing is about having your work done from aprofessional outsourcing company, a skilled
professional team, or an individual expert outside your organizational structure, yet holding all
the rights and responsibilities to the production and distribution of the product. This can be
both either advantageous or disadvantageous, at the end of it all that matters is the personal
perspective.
So when did it all begin? Well, giving an exact date is impossible but yes, it may have started
when people saw the benefits of TRADING jobs during the ancient civilizations. People
started to form groups of likeminded peers and divide tasks that were respective to the experts in
the group. Inability to perform a job due to competent reasons forced the group to collaborate
with other groups. This wild fire spread across societies, civilizations, and even countries. Seeing
this everybody began to choose specializations and there were born the specialists. Traditionally,
companies thought of doing all their work single-handedly in-house. But the work grew and thus
the production costs as well. During the Industrial Revolution the industrialists sought to gain
profits and their goals were well defined profits only! To cut on the production costs
organizations went to others to get their work done cheaply. And so, it all started. Talking about
software outsourcing, it didnt popularize until the 90s. 90s saw the Internet boom and so
everybody dipped their hands in the flowing IT river that seemed the most beneficial at that time.
Today it is highly impossible to find a task that is not being outsourced. Growing economies like
India, China, Brazil, and Russia are the hot destinations to find outsourcing vendors as skilled
labor is easily available and the economies help in checking the business processing bills. The

overlooked feature that outsourcing provides is that companies can concentrate on their core
business competencies and have their sidetrack jobs done inexpensively at the same time.
Now let us talk about the reasons why any enterprise should outsource. As mentioned above,
outsourcing gets your work done efficiently yet inexpensively.
Other reasons to outsource work are:

Look for corporate growth

Spend more time with the customers to improve MARKET share

Bring in innovation

Lack of technical advancements in the house

Access to expert competency and talent

Reduce the time to MARKET the product

Reap from a pool with variety in knowledge and skills

Tax benefits this will stay respective to the country that work is being outsourced to

The list is endless, and as said before, its the perspective that matters the most. So is outsourcing
a boon or a bane? Good question. For the short term the country whose companies are
outsourcing may see it as a shortcoming. But in the long run, the economy will be booming
again. Thus to conclude, even if the outsourcing industry may seem to be a disgrace to
the MARKET , in the long term it is going to be the significant market share contributor. The
seeds have been sown and the flowers are blooming, the fruits are not far to be reaped.

Outsourcing a boon or bane? India is still deciding

The Outsourcing industry came to India almost way back in the 1980s with some
European airlinesbringing their back office operations to India. In the last two decades the
industry has seen an unprecedented rise and is providing employment to almost millions in the
country yet there are some who are still deciding if its advent has been for the good or the bad.
The rise of outsourcing in India is often associated with the death of its rich culture and values
however its not fair to single out the industry.
Over the years India has been changing and the outsourcing Industry has only been a part of this
change. No outsourcing organization has an induction program aimed at training its employees
on consumption of drugs, extra marital affairs, casual sex or the likes. The availability of high
disposable income in the hands of the youth may account for such activities. In India where
poverty has been an issue for years and continues to be, the outsourcing industry came as a huge
relief. It provided employment opportunities to even those who could not complete
their education after their twelfth standard. It came as a ray of hope in the lives of retired
personnel from the armed services, women with no vocational background or formal degrees and
physically disabled people. Its advent gave business and increased avenues in the supporting
industries like catering, training and development,transport vendors and security agencies. The
role of outsourcing in the progress of the Indian economy can be substantiated by the fact that
the government is planning to initiate a separate ministry for it.

Offshore outsourcing of customer services boon or bane?

ABSTRACT Purpose Offshore outsourcing of customer services is growing rapidly but there
is little known about its impact on customer perceptions and behavior. This paper aims to
combine the learnings from the country-of-origin and service research to address this gap.
Design/methodology/approach An online survey was conducted by contacting a sample of
5,000 customers randomly chosen out of a database of over 100,000 customers provided by a

large American retail FINANCIAL services company, immediately after they had an
interaction with an offshore service representative, resulting in 548 complete and usable
questionnaires. Findings Consumer ethnocentrism has a negative influence on the attitude
towards offshore outsourcing and the perceived service quality and customer satisfaction with
offshore call centers. Customer satisfaction also mediates the influence of perceived service
quality on customer complaint behavior, brand image, brand loyalty, and repeat purchase
intentions. Research limitations/implications This paper focuses on the effects of consumer
ethnocentrism and attitudes towards offshore outsourcing on several perceptual and behavioral
variables in a B2C context with American customers and Indian customer service executives.
Hence, its findings may not apply to the B2B context and other country settings. Practical
implications The findings highlight the need for greateremployee training as well as customer
education for firms using offshore customer service centers, to minimize customer complaints
and protect their brand image, loyalty, and repeat purchase intentions. Originality/value The
study offers new insights on the impact of consumer ethnocentrism and attitude towards offshore
outsourcing on customer perceptions and behavioral intentions, mediated by customer
satisfaction and perceived service quality.
Offshore outsourcing is the practice of hiring an external organization to perform some
business functions in a country other than the one where the products or services are actually
developed or manufactured. It can be contrasted with offshoring, in which the functions are
performed in a foreign country by a foreign subsidiary. Opponents point out that the practice of
sending work overseas by countries with higher wages reduces their own domestic employment
and domestic investment. Many customer service jobs as well as jobs in the information
technology sectors (data processing, computer programming, and technical support) in countries
such as the United States and the United Kingdom - have been or are potentially affected.

Outsourcing HR function a boon or bane

After the advent of BPO (Business Process Outsourcing) and KPO (Knowledge Process
Outsourcing), it is now the turn of HRO (Human Resource Outsourcing). The concept of

HRO is growing at a faster pace as days are passing by. Human Resource is a very important
department in an organization. It is rather an intense pillar of an organization. Companies are
realizing the importance of hiring, training and retaining their employees, therefore
tremendous importance is needed to be given to HR Portfolio. HR outsourcing is the
outsourcing of peripheral but necessary administrative tasks such as payroll, benefits, After the
advent of BPO (Business Process Outsourcing) and KPO (Knowledge Process
Outsourcing), it is now the turn of HRO (Human Resource Outsourcing). The concept of
HRO is growing at a faster pace as days are passing by. Human Resource is a very important
department in an organization. It is rather an intense pillar of an organization. Companies are
realizing the importance of hiring, training and retaining their employees, therefore
tremendous importance is needed to be given to HR Portfolio. HR outsourcing is the
outsourcing of peripheral but necessary administrative tasks such as payroll, benefits,
Outsourcing HR function is a question of great importance. Today with the growing scenario of
industries, we come accross lots of companys are going for outsourcing their HR Functions.
There are various reasons for this, which may be the companies inability to meet the changing
trends in HR or may due to the increasing cost or lack of adequate talent within the organization.
Here is a presentation which our group of MPM students had prepared to dicuss whether
outsourcing is a Boon or Bane.
The conclusion defines that it depends and varies from organization to organization and also
which function is being outsourced.

Why Do Companies Outsource Their HR Functions?

Human Resource Outsourcing (HROs) organizations exist to support, extend, or replace the
human resources (HR) functions for other companies. HROs core business is finding the
ways to make their clients HR functions more efficient and delivering them to the client
organizations. For that reason many of these organizations strive to stay on top of the best
HR practices, emerging workforce technologies, as well as relevant laws, and regulations.
This allows client companies to focus on what is core to their business and re-allocate
internal resources for initiatives focused on increasing revenue and profitability.
HRO provides a unique outside perspective and can result in a true strategic partnership that
may be much harder to achieve within the client organization. The internal HR organization
is expected to be a partner helping attract, groom, and support the key asset of the company
the people.
WHAT ARE THE DIFFERENT TYPES OF OUTSOURCING SERVICES
There are four types of outsourcing services: professional, manufacturing, process-specific and
operational. Each of these services have grown in popularity as more businesses look to reduce
their overhead costs while maintaining the same level of output or support. There are risks and
benefits to outsourcing that must be considered when looking at different types of outsourcing
services. The greatest benefit typically is cost reduction, because the company saves in both
equipment and labor costs. The largest risks are related to quality and control.
Professional

outsourcing

services

include

accounting,

legal,

purchasing, information

technologysupport and other specialized services. This is the most common area for these types

of services, because of the potential cost savings associated with this type of arrangement. The
business has access to high quality resources while paying only for services actually provided.
This substantially reduces the organization's overhead costs.
Manufacturer outsourcing services usually are quite industry-specific. For example, an
automobile

manufacturer

can

have

an

outsourcing

arrangement

for

the

creation

andinstallation of windows in all of their models. This arrangement will have huge implications
on the operations but can result in significant cost savings and reduced assembly time. The
primary risks with this type of arrangement are related to interruption of the production line and
quality issues.
Other outsourcing services can be specific to a unique process or internal procedure. In many
cases, it is more cost-effective to have different parts or components manufactured by other
companies. This simplifies the assembly process, reducing costs and the total amount of time
required to create a complete unit.
This type of outsourcing also is found in other industries. In the service industry, it is quite
common to outsource specific aspects of the operation to other companies that specialize in that
service. For example, a bakery can outsource the delivery of the final product to
a couriercompany. This contract can provide details on delivery time lines, customer contacts and
costs. This type of business arrangement allows each company to focus on its respective strength
and improves customer service.
Outsourcing services for operational activities are more common in the manufacturing sector
than in other industries. The nature of manufacturing creates opportunities for very specific
operational activities to be delegated to outside companies. Machine maintenance and equipment
repair can be obtained from outsourcing services that specialize in the specific equipment. Other
types of operational activities include cleaning, landscaping, facilities maintenance and property
management.