Outsourcing to India started in the late 1990s when many international BPO firms’ set-up shop in the sleepy town of Gurgaon near Delhi and subsequently many other cities like Pune, Bangalore, Mumbai, Hyderabad etc. Since then outsourcing to Indian BPOs has grown by leaps and bounds. Businesses of all sizes today consider India as the most attractive destination for outsourcing not only non-core processes but higher value processes as well. In a recent survey, 80% of American and European firms (which are outsourcing) ranked India as their number one outsourcing destination. India’s National Association of Software & Service Companies (NASSCOM) also reported that almost 50% of all Fortune 500 companies choose to outsource to Indian outsourcing firms. Even though many other countries have emerged as major competitors to India, the country retains the top slot as a preferred outsourcing destination. The primary factors which motivate companies to outsource business tasks to India are as follows.
Top 5 Benefits of Outsourcing Business Processes to an Indian BPO
1. Significant Cost Reduction
Due to lower personnel costs in India, Indian BPOs are able to provide significantly lower hourly costs and flexible cost models to companies looking to outsource processes. Skilled English speaking manpower is available at a fraction of wages in US, Europe etc. For example, data entry rates can start from as low as $5/hour on FTE basis and this includes staff salary, office, equipment, internet, data security and supervision!
Outsourcing to India can enable clients to save upwards of 50% of home country costs thereby directly helping their bottom line and enhancing their competitiveness in today’s tough business environment. Also, lower costs do not mean lower quality as BPOs deploy skilled and experienced staff on client projects who at times deliver even better quality as compared to home teams. Indian BPOs are also able to adapt to the client’s requirement and offer flexible cost plans such as fixed cost projects, hourly pricing, monthly pricing (FTE), deliverable/transaction based pricing or hybrid pricing models. Clients also save on infrastructure and technology costs as well as ancillary costs of recruitment & training.
2. Increase in Productivity and Time Zone Advantage
BPOs in India usually operate 24/7 and clients can benefit from significant productivity gains by deploying teams which work across 2 or 3 shifts. Also, due to the time difference, clients can get projects delivered even when their offices are closed. When required, processes can be managed over weekends too to provide clients with 365-day coverage in a year. The ability to deploy multi-staff teams over a 24/7 365 days’/year environment means that clients can achieve output gains not possible in their home country environment. This flexibility comes in very handy during holidays and periods of increased business activity when additional staff is needed at short notice to service customer demand.
Another important factor to consider is that usually the Indian BPOs are specialized in the task you wish you outsource and can deliver enhanced output as compared to the client trying to manage the process in-house. For example an E-commerce company engaging an Indian BPO for data entry can experience higher output per man hour simply because the Indian BPO is specialized in data entry and has staff with higher typing speed and customized software for data entry.
3. Ability to Scale Up or Scale Down with Ease
Most Indian BPOs provide flexible terms which make it easy for client to ramp up teams by adding staff members on short notice when process demand picks up. Similarly, client can on short notice ramp down teams in case the process demand reduces or business priority changed. Unlike hiring staff in home office, the clients do not need to worry about employee layoffs and attached consequences when reducing team size with reputed Indian BPOs. The availability of skilled manpower also enables clients to add to their teams when business is growing and additional resources are need. BPOs usually have pre-screened candidates on the bench who can be quickly trained and deployed to client projects.
4. Free-up Management Time for Business Growth
Another major benefit of outsourcing non-core business processes to Indian BPOs is that a company is able to focus on its core competencies and tasks without burdening its management by the demands of routine non-core business processes. Each company’s management bandwidth is limited and previous and by outsourcing mundane labor intensive tasks to India, clients can free up this crucial resource to focus on tasks which enable business expansion and growth. Key employees are released from performing non-core processes and can invest more time and energy in building the firm’s core business.
5. Reduced Risks & Legal Liability
Unlike hiring staff at your office, deploying outsourced staff with BPOs in India does not hold you liable for the staff. You do not need to provide any health insurance, benefits, severance pay etc. and are not going to be held legally responsible for anything by the staff which works for you from India. Your contract with the Indian BPO protects and indemnifies you from all these staff borne risks and legal liabilities and all the staff which works for you is on contract with the BPO you work with and not you directly. The BPO however provides for an is liable for providing the staff with industry wages, benefits etc.
