RESEARCH QUESTIONS

Research Questions

Research Questions

1.WHAT IS IMPORTANCE OF OUTSOURCING BUSINESS TO INDIA. AND HOW MUCH DOES IT CONTRIBUTE TO THE INDIAN ECONOMY?

India is the leading country for offshore outsourcing. The offshore outsourcing industry started in India and it has be able to grow the IT and BPO export sector to $47 billion and capture more than half the offshore outsourcing industry. That is not to say that India does not have challenges or is the best location for every offshore outsourcing effort, but it has an unparalleled history and size. (Aalders 2006)

The Americas and Europe are the largest customers for the Indian outsourcing industry and account for 60% and 31% respectively of IT and BPO exports. The largest vertical sectors are financial services (41%), high-tech/ telecom (20%), manufacturing (17%) and retail (8%). In 2009 the IT and BPO export industries employed about 2.2 million people.

IT and BPO services outsourcing first started in India in the mid 1980s. The large, English speaking, low-cost workforce was the main attraction. The industry grew rapidly through the 1990s aided by the dot com boom and IT upgrades to prepare for potential Y2K bugs. The 2000s saw similar growth with work moving to India in down cycles to help companies cut costs and in boom times to capitalize on the readily available talent. (Kobayash 2002)

The 2008-2009 global recession has had a negative impact on outsourcing growth in India, but the sector is experiencing a turn-around in 2010. Many US and European companies are still cautions about the speed or staying power of the 2010 economic recovery and thus are looking to maintain a low cost base in locations such as India. We expect IT and BPO outsourcing in India to bounce back to double digit growth rates in 2010.

The ITES or BPO industry is a sector in India that has been in existence for a little more than ten years. Despite its recent arrival on the Indian scene, the industry has grown phenomenally and has now become a very important part of the export-oriented IT software and services environment. It initially began as an activity confined to multinational companies, but today it has developed into a broad based business platform backed by leading Indian IT software and services organizations and other third party service providers.

The ITES/BPO market expanded its base with the entry of Indian IT companies. The ITES market of the present day is characterized by the existence of these IT giants who are able to leverage their broad skill-sets and global clientele to offer a wide spectrum of services. The spectrum of services offered by Indian companies has evolved substantially from its humble beginnings. Today, Indian companies are offering a variety of outsourced services ranging from customer care, medical transcription, medical billing services and database marketing, to Web sales/marketing, accounting, tax processing, transaction document management, telesales/telemarketing, HR hiring and biotech research. (Davies 2009)

Looking at the success of India's IT industry, the central government identified the ITES sector as a key contributor to the economic ...