The term outsourcing can be defined as the delegation of business processes to an external service provider that in turn carry out business functions based on the client requirements. Some of the services offered by BPO industries include customer support services, technical support services, backoffice services, telemarketing services, data processing services, data entry outsourcing services, web research services, accounting services etc.
Outsourcing Sector in India
India has become developed as a major center of outsourcing mainly due to India’s demographic advantages. Other significant attractions of Indian outsourcing sector include English speaking people and the availability of workforce at low cost. Following are some of the driving forces behind the Indian outsourcing sector:
- Access to Latest Technology: The use of cutting-edge technologies and highly accessible internet at minimal cost is the strategic advantages of Indian outsourcing industry.
- Skilled Workforce: India is a country of having large workforce. Majority of Indian people are graduates and among these most of them are technical graduates. Therefore, skilled laborers are abundant at low cost.
- Reduced Cost: Significant amount of cost saving is possible in Indian outsourcing sector mainly in the data entry outsourcing sector due to the availability of resources.
- Language: A large number of English speaking people are available in Indian subcontinent. All these factors of India help to gain an outstanding position in the outsourcing sector.
Challenges
External Challenges
Most of the countries are planning to ban outsourcing of business processes to other countries because the natives losing their jobs. Unemployment is a major threat to the countries and it paves the way for poverty.
Internal Challenges
- Poor governance in India leads to the loss of control of outsourcing sector.
- Lack of communication can create misunderstandings in the requirements of clients.
- Cultural difference may create unrest among Indian employees.
- Reduced quality of output may beat the outsourcing sector.
Outsourcing Sector in USA
Over the last five years, the outsourcing sector in USA has improved. Outsourcing industry in USA combines high and small revenue generating companies. According to a study conducted by IBISWorld, the three companies account for the major share of total revenue in the outsourcing sector in USA. However, other outsourcing companies such as CBRE and Synnex also strive to maintain global presence in the outsourcing sector.
- Technologies and Innovations: As a developed country, USA can provide high quality output by using latest technologies. Americans are also capable to make innovations in the respective fields.
- Low Cost: Outsourcing industry in USA can deliver non-core and core business process at minimal cost.
- Language: Americans can handle English language than any other natives and it is one of the strategic benefits of outsourcing industry in USA.
Challenges
External Challenges
External challenges are same for both the countries India and USA. Today, countries are experiencing the impact of unemployment; therefore, most of the countries are not willing to outsource their business functions to a third party.
Internal Challenges
- Different cultural backgrounds work as a major barrier in outsourcing sector in USA.
- Lack of human resource is another significant internal challenge facing outsourcing industry in USA.
- The cost higher than the expected paved the way for loss in the outsourcing sector.
Outsourcing industry helps the companies to reduce the cost of their entire business functions. Countries like India and USA are competing to deliver high quality services in diverse fields such as business process outsourcing and knowledge process outsourcing.