Offshore: India Ahead of the Pack

Date:   Monday , May 31, 2004

At the end of 2003, there were widespread media reports that both Dell Computers and Lehman Brothers brought offshore call-center jobs back to the U.S, citing difficult-to-understand accents and long wait for calls to be answered. Despite these setbacks, many companies, including Dell and Lehman, continue to outsource work to India.

A major factor contributing to the attractiveness of India is the “sheer breadth and depth of the skill base in terms of education levels.” As pointed out in A T Kearney’s 2004 Offshore Location Attractiveness Index, India remains the star performer. “India has captured the top spot by a comfortable margin, due to its strong mix of low costs and significant depth in human resources.

China’s vast labor pool and low costs secured it second place in the index, although it lags behind in terms of experience and other key factors such as IT and management education, language skills, concerns about intellectual property and overall country risk,” says the report.

“In addition to its much-discussed cost leadership, India also takes a commanding lead in the people category, thanks to two strengths: It offers the deepest experience in business process outsourcing (BPO) and a large labor force second only to that of China.” In mid-2003, A T Kearney surveyed executives from 115 companies representing six global industries: communications, high-tech, automotive, chemicals, consumer goods and financial services. The main question: In which countries do you currently have offshore operations? It wasn’t a surprise that 67 percent of the companies surveyed had presence in India. Where is India vulnerable? The report points out that although India’s human assets have made it the offshore leader, it ranks below the top 10 in terms of business environment. Infrastructure weakness and concerns over economic stability pull India down. In addition, while India has become increasingly integrated into the global economy in recent years, the general population is not widely exposed to other cultures, sometimes making cultural adaptation a challenge.
Yet India’s environment score still outranks that of most other low-cost Asian locations. Government efforts to improve infrastructure and maintain economic and political stability seem likely to reinforce India’s emergence as a global leader.