Outsourcing to India- The Challenges Ahead

Software Outsourcing to India has grown tremendously in the last few years

. India boasts of the one the finest software professionals on the earth and world-class IT infrastructure. There are many Indian software development companies who have left their mark on the global IT platform. India today has 65% of the total software companies in the world, which have earned CMM level 5. This in itself speaks about the capacity of India software industry to deliver outstanding software development solutions to global clientele.

Presently India is leading provider of the software solutions in the world. The exceptionally skilled work force, high proficiency in English language and low development rates make outsourcing to India very attractive for countries like USA, UK and Australia. The bulk of software outsourcing comes from USA and Indian companies have aligned themselves professionally to get a competitive edge over China and Philippines.

Inspite of its strengths, Indian IT industry stands to loose its, number one spot to China if it does not address the underlying problems. The smaller emerging economies like Philippines, Vietnam, Latin America, etc will certainly bite into the global software outsourcing pie and reduce the India's share. The Indian software Industry needs to seriously review its shortcomings and take necessary steps to eradicate them. There are many challenges that Indian software industry faces today and major ones are mentioned below:

1)Terrorism- The present day security scenario in India looks grim. Terrorism is spreading fast and it can downgrade the image of India in the eyes of the foreign clients. The outsourcing clients want smooth continuity in their outsourced business operations and will closely look into security environment of India, in near future.

2)Infrastructure- It is the next big problem because the big cities like Bangalore, Hyderabad, etc, are getting saturated and do not offer any cost benefits. The living expenses are climbing and this will certainly increase the cost of software development in these big metro cities. The problem is further compounded by lack of pace in growth of tier-II cities, which can offer cheaper infrastructure to IT companies. This slow paced growth will certainly hit Indian software industry under belt in near future, if remedial actions are not taken now.

3)Education System- Though India at present has largest percentage of the young population in the world; it still lags behind developed countries in education. The entire education system needs to be revamped and made more industry oriented so that Indian IT workers can maintain their technical finesse for long time to come.

4)Competition- The competing countries from Latin America and Eastern Europe will provide lower cost software outsourcing services and induce Indian software development companies to cut their profit margins to stay competitive. China with its better governance and speedier economic reforms will overtake India within a decade.

5)Human Resources Training- The outsourcing needs of the foreign clients change with time. Presently BPO outsourcing occupies a center- stage but it will be replaced by Knowledge Process Outsourcing (KPO) in near future. The Indian software industry, at present is unprepared to equip its youth with knowledge, of a global scale, needed for the KPO industry.

The Indian software industry should work with Indian government and root out the problems. The collective efforts will help Indian software industry to overcome these challenges and ensure that outsourcing to India remains very attractive to the foreign clients, for a very long time to come.

Outsourcing to India- The Challenges Ahead

By: Annie Brunson

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