7OUTSOURCE

ABSTRACT

This project is about on one of the emerging business trend “Offshore Outsourcing”. World business market is getting full of competition because of incoming competitors, and if business wants to survive in this global economy we have to accept the concept of TINA (There Is No Alternative). The only business will survive who cut cost from every possible sector of business processes. By using Business Process Outsourcing, business can enjoy competitive advantage.

As we can see that before it was industry revolution but now the upcoming trend is about service sector revolution, and we know that customer is the king of market and their needs are ever increasing, So that I described Offshore Outsourcing industry in my dissertation. Outsourcing industry is growing at very
high speed and covering customers around the globe.

Conclusion of this research is based on evaluation and analysis carried out.

[ 1 ] INTRODUCTION

The aim of this research is to give me an insight overview in to the actual world of Outsourcing as strategy. My research would help me to observe the functioning of the outside world of Outsourcing.

INTRODUCTION TO RESEARCH

Latest news from Newspapers, Magazines, Journals from Business Consultants and Journals of Research Institute about why Multinational companies going more and more towards outsourcing, give researchers emphasis to find why outsourcing is such important that most of Top Multinational Companies of the world and specially Fortune 500 companies accepting outsourcing as a very important factor as their strategy.

Business world is progressing at a very higher rate and everyday new concepts, strategies and principles keep emerging out. It is very important for anyone to keep a track of an emerging trend in business and one of such emerging trends in today’s emerging world is Strategy to progress. And to achieve this strategy, most of multinational companies use Outsourcing.

Outsourcing, a dynamic tool that has swept across World, is business landscape is now on the path of an explosive world-wide growth. Corporate managers and executives are quickly realising the importance and effectiveness of outsourcing in their business. The global industry talks outsourcing. At such a point of time it is very difficult for one to ignore the importance of outsourcing. Simple definition of an outsourcing shall be “Transferring a part or whole of a task out of a number of tasks to an independent unrelated professional body.” Though this is not a full or a complete definition yet it
describes a small bit of outsourcing.

Research will start from Target and Objectives. After that Outsourcing will be proved as a major strategy for the organization. Major Advantages and Disadvantages will be mentioned and proved through qualitative and quantitative research. In concern in HSBC bank and banking sector, how important outsourcing is, is mentioned.

RESEARCH TARGET

The target of my research project would be to give an understanding of Outsourcing and How Outsourcing is working as a corporate strategy and to evaluate Business Process Outsourcing specifically targeting in India as an area of research work. I will also going to use small case study of HSBC Bank to find out how outsourcing is working as a strategy.

RESEARCH OBJECTIVES

The objective of my research is to get an overview of Outsourcing as a strategy, which is sweeping across all the developed nations of the world. I wish to take a deep insight of Offshore Business Process Outsourcing, which has become and is expected to be, one of the major issues in the International Business and Trade. I wish to explore the reasons, benefits, costs, causes, effects etc. through this research, that have so far led to the development of Off Shore Business Process Outsourcing as a whole. To serve the objective of my research I have chosen India and HSBC Bank as the base example on which my research would be based. I have chose India because, India is emerging as an epic centre for the Outsourcing industry. Over the last 5 years the Indian Business Process Outsourcing Industry has grown at a mind boggling pace of close to 70%, which is the highest all over the world. I have chose HSBC because, it is UK biggest bank and World’s 2nd Biggest Bank and was one of the beginner which started outsourcing in banking sector in UK

To summarize, the objective of my research would be:

1. To find out how outsourcing is working as a strategy for the company and organisation according to Branch Managers.

2. To find out, how outsourcing is working as a strategy.

3. To examine how outsourcing to India is working as a strategy.

4. To study the benefits for India, when companies are outsourcing to India.

5. To study how outsourcing in banking sectors and in HSBC bank

LIMITATION OF RESEARCH

1.] This topic is too broad to mention every aspect of outsourcing. Therefore, major concentration was on specific topics mentioned above in Aims & Objectives.

2.] It is very difficult to find out perfect strategy of any company or organization implemented for cost cutting through outsourcing. It has been found in most of research, companies are not interested to disclose their private business affairs.

3.] During my research, it has been found that only 20% of branch managers are interested in giving interview to any college student on mentioned topic. It was very difficult to get information from them for this research.

4.] It was difficult to get primary data from large sample & therefore in depth interview with a sample was undertaken. Apart of these in depth interview various books, generals, press reports, speeches, news and articles has been concerned to find the research data.

5.] None of outsourcing services Provider Company were ready to share their opinion with this research during my visit to India.

[ 2 ] LITERATURE REVIEW

This section deals with aspects of outsourcing. Various important aspects of outsourcing will lead us to find out how and why outsourcing is very important for the multinational companies of developed countries and for the growing population of developing nations. Various current news and press reports have been mentioned to explain, how outsourcing is increasing in multinational companies as a good strategy.

STRATEGY

Outsourcing is being used as a pioneer strategy in current era of globalization by many multinational companies. Tim (2000), mentioned that outsourcing has been increasing since the Second World War, and especially rapidly in the 1990s, in 1946 only 20% of a typical American manufacturing company’s value added in production and operation came from outside sources; 50 years later, the proportion had tripled to 60%.

Rob (2001) repeats a similar observation that outsourcing is a proven business process over the past 50 years. Multinational companies have outsourced advertising, legal services, fleet management, building maintenance and production.

According to Report “New Horizons: Multinational Company Investment in Developing Economies” by MGI (Mckinsey Global Institute, October 2003), research by MGI found that many companies from well developed nations are saving billions of dollars when they offshore their back-office functions and services in jobs.

According to Grant Ringshaw, Daily Telegraph, (25/05/2003), “Companies are making spectacular savings by shifting their call centres to the Subcontinent - and shedding British jobs.”

According to Mike (2003), “UK call centre worker is paid £12,500, but companies can hire graduates in India for one sixth of that”. This will show that how outsourcing is working as a strategy for many Multinational Companies.In simple words, profitability is the main goal of every business and a various types of planning means strategy to achieve it. Strategy can be defined as special kind of plan to achieve some goal of particular company of organization.

Management has to construct strategy in some of the following Sectors of the Organization for profitability.

- Integrating Management

- Marketing

- Finance/Accounting

- Productive/ Operations

- Research and Development

- Computer Information system

- Information Technology

- Human resource Management

OUTSOURCING

Term Outsourcing may be varying as per various authors. Some of the definitions of outsourcing are mentioned below

According to Elizabeth (2005), Outsourcing can be defined as “The transfer of responsibility for any IT services, including planning, management and operations, to an external service provider”

According to Irving and Harrison (1996), Outsourcing can be defined as “the transfer of one of an organisation’s internal activities to a third party”

According to Nelson-Nesvig (1998), “Outsourcing occurs anytime the organisation elects to utilize outside, independent workers to conduct work-related tasks.” According to Mark (2005), “Outsource means to contract work out from your own organization to another, however the picture is not always that simple.”

According to Mckinsey Report (2003), “Preface to the Information Technology / Business Process Offshoring case”, Outsourcing means “Unbundling vertically integrated processes and purchasing them back as services to leverage superior capabilities and/or lower costs.”

According to Ronal (2005), “Outsourcing involves the sourcing of goods and services previously produced internally within the sourcing organisation from external suppliers”

Ian Benn & Jill Percy (2002), quoted that “Outsourcing - Allowing a Partner to Manage a Part of Your Business”

Bjoon (2002) defined Outsourcing by “The decision and subsequent transfer process by which activities that constitute a function, and that earlier have been carried out within the company, are instead purchased from an external supplier”

According to Turban (2003), “Obtaining services from vendors rather than from within organization, is known as outsourcing”

Whatever I believe is that outsourcing is simply transfer of service from one company to another contracted company, whether it is sales of service or purchase or other company, where another company can be onshore or can be offshore.

In other words, the transfer of components or large segments of an organization’s internal IT infrastructure, staff, processes or applications to an external resource such as an Application Service Provider is called outsourcing.

Gay (2000) describes strategic outsourcing means that an organisation works with one or more suppliers in order to effect a significant improvement in business performance.

Some organization opened their own subsidiary companies in India and some have contracted.

OFFSHORING

According to Mckinsey Report (2003), “Preface to the Information Technology / Business Process Offshoring case”, Offshoring means “The phenomenon of locating IT-services and other business processes in optimal offshore locations, largely enabled through recent advances in communications technology, to leverage differences in wage levels and the availability of skilled labour across borders.”

Whatever I believe is that outsourcing is simply transfer of service from one company to another contracted company, whether it is sales of service or purchase or other company, where another company must be offshore by this definition.

OFFSHORE OUTSOURCING

Offshore outsourcing basically means transfer of services somewhere else to get maximum output in production, lowers cost, beat competitor, to get tax benefits or to pursue any other things.

Since last few eras, offshore outsourcing has increased at a major rate due to advancement in satellite and internet technologies, better connectivity and a constant search for cheaper labour to cut costs and beat competition. According to Sundeep (2003), India has come from long way from the starting situation. Outsourcing has begun in 1985 when Texas Instruments established their subsidiary in Bangalore. The remarkable success of this center to undertake leading edge work inspired other firms to establish facilities in India particularly in Bangalore

BPO

BPO can be expanded as Business Process Outsourcing and can be aptly defined as the act of utilizing the services of a third party by a company in order to perform its back office operations to cut cost, increase productivity, lack of staff or lack of employee skills and any other strategic reason.

Business Processing Outsourcing Contents

- Customer Relationship Management

- Call Centers and telemarketing

- Tele-servicing and product support

- Payroll maintenance

- Finance / Accounting/billing

- Human Resources

- Logistics Management / Supply Chain Management

- Medical transcription

- Insurance Claims Processing

- Legal database maintenance

- IT and Software Outsourcing

OUTSOURCING AS A STRATEGY

Currently each company wants to improve its market value by some or the other aspect. To achieve this market value, and amount of profit, each company comes up with different strategies. Nowadays industries are booming up with the aid of outsourcing and offshore outsourcing.

There has been continues growth in companies who outsource their work towards cheaper labour countries. According to Philip (2003), McKinsey, the strategy consultant, has based a large part of its global research division in Madras, India. The department was set up with 10 local staff in 1998 and has grown to more than 100 in 2003, more than three times the 30 research staff in the UK. This will show the importance of outsourcing between worlds’s many top firms. Multinational companies are getting aware more and more towards need of outsourcing in their firms.

According to Grant Ringshaw (2003), Daily Telegraph GE had 11,000 Indian processing staff in 2003. According to Mark Kobayashi (2004), GE had 13,000 Employees in late 2004.

According to Mark Gongloff (2003), by 2004 more than 80% of US executives boardrooms will have discussed offshore outsourcing and more than 40% of US enterprises will have completed some type of pilot.

According to Porter (1980), various factors like income, factor costs, energy costs, marketing practices, and distribution channels are concerned. Part of this reduction may be due to the aggressiveness of multinational companies in spreading techniques around the world

According to Tony (2004), Outsourcing is the term used to describe the buying of goods and services deemed to be non-core activities of the firm. This particular trend leads to interdependencies that require relationship management skills. According to Geof (2003), senior analyst of outsourcing services at IDC Canada, Jason Bremner, suggested that outsourcing should have broad appeal. Every company has unique needs, there is undeniable evidence that outsourcing allows executives to focus on the core business while resolving skills shortage or resource problems, reducing costs, and fundamentally transforming how an organisation thinks, acts and operates.

According to Prahalad (1990), The huge explosion of the outsourcing industry can be attributed to the rise of the concept of “core competence” According to Harland (1995), One important question of what firms deem is to be core or non-core activities.

According to Stuart (1999), the rationale behind outsourcing is to focus on profitable process where the company has a relative advantage and to outsource the reminder to third parties who can perform them effectively.This research in wide is discussed onto finding section, that how outsourcing is working as a very good strategy.

WHY COMPANIES COMPELLED TO START OUTSOURCING?

Outsourcing really does not seem to be the magic answer only for cutting costs. On the contrary outsourcing is way more complicated and can lead to drastic situational developments in the afterward.

GE, HSBC, City Group, IBM, Oracle, Deutsche Bank, Microsoft, Intel, Cisco, Yahoo, Amazon, Google, Reuters, HP, Dell, BT, Nokia and many more companies accepted outsourcing as a part of their leading strategy

DESTINATION FOR OUTSOURCING

Companies can outsource their work to any part of the world. It can be onshore or offshore. Most famous offshore destination for outsourcing is India. Other offshore destinations for outsourcing are China, Russia, Philippines, Brazil, Mexico and Ireland.

OUTSOURCING IN BANKING SECTOR

Outsourcing is a critical part for banking sector. Call center customer services, telephone banking, credit card processing, mortgage applications processing and loan inquires, such important aspects of banking can be outsource to cheaper labour countries. But before starting outsourcing banks have to find out whether their employees are ready to accept this change. It is true that it will increase productivity of banks and reduce their costs. So that they can keep their place in competitive market

According to Rainer (2005), before accepting outsourcing as a strategy, banks must first ensure that their institutions are both organizationally and culturally. Cultural elements are particularly crucial when it comes o the willingness of bank employee to accept an arrangement that requires close collaboration with people from other cultures and that may lead to job cuts in the market.

According to Keynote (Oct/2004), HSBC moved 4,000 jobs after reaching on agreement with UNIFI, The Inland Revenue created 3,000 call center jobs in India to handle tax credit inquiries. Almost 1,000 jobs at Lloyds TSB’s Newcastle center and 150 Lloyds TSB insurance jobs in Wales were exported to India. Lloyds TSB has a call center in Mumbai with 1,500 staff.

OUTSOURCING AND INDIA

Outsourcing has been working as a good economical strategy to attract (FDI) Foreign Direct Investment for India. Outsourcing saves major operational cost of Multinational Companies. Thus India will have good opportunities for the employment for local people.

Offshore Centres in India handling processing of student loans, queries about utility bills, flight bookings for Aviation Industry, Web designing services, IT services, Software development, Accounting services and call centers. A series of other British companies, including BT, HSBC, Prudential and Aviva, are shifting their call centres to the world’s biggest democracy - India.

According to India Brand Equity Foundation Copyright (2005), International Data Corporation (IDC) has announced that IT-enabled services market globally will account for revenues of US $1.2 trillion by 2006 and projected 11% growth annually. Thus the ITES/BPO segment will provide one of the most significant business opportunities for Indian software and serviced industry.

According to Keynote (March/2004), In 2003, BT group plc awarded a $160m contract to HCL Technologies ltd. To set up a dedicated contact center in Noida, India. This is one of the largest contracts to be awarded to an Indian company and the center is expected to house more than 1,000 software engineers, administrative staff and analytics experts. The center has dedicated link to BT’s own co-location center in the UK so that BT employed managers can handle the task itself from UK.

Company :- British Airways
Employees :- 2,400+

Notes :- Managing passenger accounting, error handling and frequent flier miles tracking for BA and other airlines

Company :- Dell International Services

Locations :- Bangalore & Chandigarh

Employees :- 8,000

Notes :- Supports PC customers worldwide

Company :- HSBC Electronic Data Processing India

Locations :- Bangalore, Hyderabad, Kolkata, Vizag

Company :- Morgan Stanley

Locations :- Mumbai

Employees :- 1,600
Notes :- Provides transaction support for operations in UK, Europe and Australia.

The company has a $51m outsourcing contract with the State of California to provide benefits and card administration services JPM uses India company, MsourcE, to operate three overseas customer service center in India Mexico that field 3500 calls a month from the 382,000 Californians currently using the cards

Company :- Prudential Process Management Services (UK)

Locations :- Mumbai

Employees :- 850 (Oct, 2003)

Notes :-

INDIA AS OUTSOURCING SERVICE PROVIDER

India is top outsourcing services provider in global world. Contribution of Foreign Direct Investment in India is increasing day by day in India.

McKinsey has defined India’s leading position as a top outsourcing service provider in article “Preface to the Information Technology / Business Process Offshoring Case” in (2003)

According to Diana Farrel (2004), The McKinsey Quarterly, 2004 Special Edition, “What global executives think”, India’s leaders have to ensure that a company hunting for an offshoring location doesn’t turn to other countries. The government must not only adjust the country’s educational policies to ward off the looming squeeze on talent but also invest more money in infrastructure. So far, offshoring has been largely a private-sector affair, and in some respects the lack of government involvement has been the secret of its success.

According to DATAMONITOR (2005), Over the next couple of years, home-grown firms such as Daksh (now part of IBM), ICICI-OneSource, Infosys, TCS and Wipro are expected to represent a serious challenges to the established overseas OSBs like ClientLogic, Convergys, EDS, LiveBridge, Precision Response, SITEL, Sykes, TeleTech and Teleperformance that have call center operations in India

HSBC, Citibank, IBM, Microsoft, Oracle, Cisco, Prudential, Hewlett Packard, ATT Wireless, TransUnion, First Consulting Group (FCG), Dell Computer Support, Bell South, EDS, GE Capital, GE, IBM, Schlumberger, Qwest and Rand McNally, there are some of the companies who has started to outsource their work to India.

According to BBC News (22/12/2005), India’s IT and outsourcing sector is currently worth about $22bn and expected to grow by 25% until the end of the decade. Business worth $110bn will be outsourced worldwide by 2010 and India is set to capture more than half of it upto $60bn a year.

According to Pierre (2003), BT Retail Chief Executive, Indian call centers are 40% cheaper than UK and quality of service was sometimes better. Cairncross (2003) adds, the main intention behind outsource to India is clearly the cost difference - a lower wage buys the same or greater skills than in the rich countries. According to Alan (2003), The Indian operations doing the work formerly undertaken by US teams not only do the work more cheaply, but they are more productive, and work to high standards.

WHEN OUTSOURCING HAS BEGUN IN INDIA

It has been in question of debate in terms of when actual outsourcing of IT has been begun in India. Before some years, medical prescription was outsourced to India for scanning work and typing work. According to India Brand Equity Foundation Copyright (2005), it had a quiet beginning in the early 1990s when pioneers such as GE, Citibank, Amex and British Airways set up captive units in India. Now this trend has burgeoned into a huge industry with third party ITES/BPO companies bagging prestigious remote services projects from leading global organisations.

LABOUR POOL OF INDIA

Increasing labour pool of India has been major plus point for Indian offshoring industry and giving significant boost to it.

But According to Diana Farrel (2005) from McKinsey Quarterly in “Sizing the emerging global labour market”, they found that India’s vast supply of graduates is smaller than it seems once their suitability for employment by multinational companies is considered”

According to Mike (2003), “India may be a poor country but it has a well-educated, English-speaking workforce” Research has been found that India is the best country in terms of labour supply. They have the maximum number of English speaker, maximum number of young graduates in accounting, software technology and web field. According to India Brand Equity Foundation Copyright (2005), India is in a strong position to satisfy the demands of the outsourcing market. India’s biggest strength is its vast supply of over 2 million graduates and 300,000 post graduates that pass out of its colleges each year. India has vast resource of English-speaking college-educated workforce and low-cost labour gives it an edge in the offshoring world.

According to DATAMONITOR (2005), No other nation that offers English-language offshore call center outsourcing can come close to India in terms of the scale of the available labour pool offer. To reap, Indian contact centers have access to a pool of 15 million Indian college graduates each year, most of them fluent in English. Oftentimes, the majority of call center agents in India hold higher level of qualification than their counterparts in western domestic markets.

GROWTH IN BPO

There has been continues growth in amount of services outsourced to cheaper location.

According to Vivek (2003) in “Who wins in Offshoring”, Gartner and IDC, consensus estimates of market research firms Aberdeen Group, “Business-process offshoring is still a nascent industry. By our estimates, in 2002 it was worth $32 billion to $35 billion, just 1 percent of the $3 trillion worth of business functions that could be performed remotely. Because of the significant benefits already being realized through offshoring, the market is projected to grow by 30 to 40 percent annually over the next five years.2 This prospect may cause consternation over job losses in the United States, but it will make offshoring an industry with well over $100 billion in annual revenues by 2008.”

OUTSOURCING IN HSBC BANK

According to DATAMONITOR (2002), in “Outsourcing-moving offshore without sinking”, Sir Keith Whitson, CEO of HSBC, has told the press that HSBC’s call center in India and china have better workers than the bank’s UK staff. He says Asian employee are “quicker at answering the phone, highly numerate and keen to come to work every day” and can do the work for “a fifth of the price” of Europeans.

BENEFITS OF OUTSOURCING

According to Ian (2002), Various Benefits of Outsourcing can be described as
below.

1. Focus

2. Quality of Service

3. Recruiting the best

4. Better Technology

5. Wider skills pool

6. Agility

7. Employee benefits

[ 3 ] RESEARCH METHODOLOGY

For my ongoing project of outsourcing, I have concentrated on both primary and secondary data. To get the available and accessible data, I would go by qualitative research by interviewing local branch managers and employees.

For this research, I have decided to concentrate on rapidly developing country like India as an outsourcing service provider and UK as an outsourcing service buyer country. I will try to evaluate the impact of Business Process Outsourcing and its advantages and disadvantages on the Economic and Industrial development of India & various industries. Understanding of Different various aspects of Business Process Outsourcing and their effects on the development of service sector and its contribution to Indian Economy will also form part of the area covered in this research.

PRIMARY DATA COLLECTION

Research methods should be simple effective and efficient in concern with time and money.

To analyse the outsourcing industry, it is more suitable to carry out a qualitative research because it will give us more particular primary information about what managers are thinking regarding new era of outsourcing as a strategy and we can gather suitable data directly without any errors. The objective of qualitative research is to gain qualitative understanding of the underlying reasons for outsourcing.

According to business project manual of Sunderland University, qualitative research intended to explore meaning, understanding and experience by looking as to how people view their world, the process of how things occur and put the theory into practice.

It was very difficult to take detailed interview with senior head office staff. Even it was very difficult to meet them and ask particular perfect things. We have found very difficult to take appointment to meet them and ask questions like how much they have saved once they have started outsourcing.

To find out what the companies are thinking about the current biggest on going strategy of outsourcing, the questionnaire has been distributed and short-interview has been taken to find out their personal thinking amongst branch managers and employees. A sample questionnaire has been mentioned in Appendix A. Here, we took our sample size 20 which include managers and employees from different organizations. In managers we distributed the questionnaires to the branch managers and other managers.

The aim behind primary data collection is to find out what are the branch managers and other managers thinking about strategy of outsourcing and whether they are positive about outsourcing as a good strategy. Because they are may be going to operate company and all companies’ necessary operations in the nearby future. Other aim behind Primary data collection is to find that whether outsourcing is proper strategy or not? Whether first world nations are getting benefit through outsourcing or not?

The researcher has focused effectiveness of outsourcing as a strategy from the prospective of company. We also had chance to speak to some of employees and mangers, which made even clear why people feel and how they do.

Questionnaire is the easiest and the simplest way of collecting data. They are quite economical interim of materials, money and time as compared to the research data they provide and are also easier to arrange. So I have made a Questionnaire regarding essential questions, which are very important for this research. After making Questionnaire, I have taken interview with managers and employees with that questionnaire.

In questionnaire, Yes & no and Multiple-choice questions have also been used in my questionnaire. People can share their opinion by following aspects Strongly Agree, Agree, Partly Agree, No Comment, Partly Disagree, Disagree and Strongly Disagree. My Questionnaire is open ended. The aim of open questions is to give opinion, feeling, and accurate information and we can feel their situation and thinking.

Here, Non-probability sampling methods have been chosen, because on the basis of the results any mathematical calculations are not going to be made. As a non-probability type has different methods we have used convenience sampling and purposive methods.

According to Sunderland University manual Convenience sampling methods means, to choose most easy and available members of population, such as family, friends and neighbors and work colleagues. Here we have decided to go through company branches near residents.

Under the sampling method, accurate information through targeted member of populations can be obtained.

SECONDARY DATA COLLECTION

The main aim behind doing this secondary research is to find some numerical amount, which is not possible through interview, email or by telephone. Companies are not intended to leak some of the private information to any body. One more reason behind this is that, the subject of my research is too broad to find some information through primary research. So the research is such that, all information is collected through more and more reliable Secondary Sources such as Books, Magazines, Journals, News Letters, Internet, press report, speech by CEO etc.

Some information is not available through Primary Sources such as Interviews. Also, it is not possible to interview many individuals working in big Companies engaged in Business Process Outsourcing so I have decided to go through some research word done by various consultants and groups mentioned below.

PUBLICATION BY RESEARCHERS & CONSULTANTS

[1.] Mc Kinsey & Company

1. McKinsey Article, Preface to the Information Technology / Business Process Offshoring case, 2003

2. McKinsey Report, Ensuring India’s offshoring future, 2005

3. The McKinsey Quarterly, Sizing the emerging global labor market, 2005

4. The McKinsey Quarterly, A richer future for India, 2004 special edition

5. The McKinsey Quarterly, Who wins in Offshoring

6. McKinsey Report, Offshoring and beyond, 2003

7. Mckinsey Global Institute, New Horizons: Multinational Company Investment in Developing Economies

[2.] Boston Consulting Group

1. “IT Outsourcing and Offshoring: Hype or Opportunity?”

[3.] DATAMONITOR

[4.] Forbes

[5.] Keynotes

JOURNALS

1. Personnel Today

2. Harvard Business Review

INTERNET

NEWS WEBSITE

BOOKS

1. Buying Business Services

2. Inside outsourcing

3. The Outsourcing Process - Strategies for Evaluation and Management

4. A Guide to Global Sourcing-Offshore outsourcing and other global delivery
models

5. Supply Chain Management: relationships, chains and networks

6. Outsourcing to India - The offshore Advantage

7. Competitive Strategy

8. The IT Outsourcing Guide

9. Corporate Turnaround : Managing Companies in distress

10. Global IT Outsourcing-Software development Across Borders

11. Supply Chain Strategies : Customer-driven and customer focused

12. Information Technology from Management: Making connections for strategic Advantages

13. Strategic Outsourcing - Exploiting the Skills of Third Parties

14. Management Directions: Outsourcing Corby

15. Outsourcing Solution: Workplace strategies that improved Profitability Michigan

MAGAZINES

[1.] The Economist

NEWSPAPERS

[1.] The Daily Telegraph

[2.] Guardian

[3.] The Economic Times

[4.] Financial Times

[5.] Financial Express


[ 4 ] RESEARCH FINDINGS

The Offshore Outsourcing market is estimated to increase more and more and in the years to come with more and more companies planning to outsource their work at low end as well as high end jobs to offshore destinations. Conducted Primary and secondary research has given following findings. And I have been able to find out why it is so much important.

FROM QUALITATIVE RESEARCH

From my qualitative research, I have found personnel views of Mangers and employees regarding outsourcing, what they have think outsourcing as a strategy

OUTSOURCING AS GOOD CORPORATE STRATEGY

As mentioned in the research methodology a sample size of 20 was chosen from managers and employees. The main intention for this research is to find out effectiveness of outsourcing as a strategy in different aspects

[ 1. ] When the question was asked regarding Does they accept that outsourcing is good strategy to go for, all of them answered positively. All agreed it to be a very good and an extremely useful for every aspect of the business

In response to above question, 70% of them were agreed. 20% were strongly agreed while 10% were partly agreed. How many Employees & Managers were agreed in each question is mentioned in below table in detail.

[ 2. ] When the second question was asked regarding Does they agree that outsourcing is working as a good strategy for the organization, all of them
answered positively. All agreed it to be a very good and an extremely useful for every aspect of the business

In response to above question, 50% of them were agreed. 25% were strongly agreed while 25% were partly agreed. How many Employees & Managers were agreed in each question is mentioned in below table in detail.

[ 3. ] When the third question was asked regarding Does they think that outsourcing is proper strategy to go for it in your organization, half of them answered positively. In response to above question, 50% of them were agreed. While 50% were disagreed. How many Employees & Managers were agreed in each question is mentioned in below table in detail.

[ 4. ] When the fourth question was asked that does their organization involve in outsourcing, 75% answered positively, while 25% answered negatively. Detail has been mentioned below.

[ 5. ] When the fifth question was asked that do they already outsourced any functions or activities recently, we have received a mix of all. Some employees and Managers didn’t want to disclose these things or they didn’t know.

[ 6. ] When the sixth question was asked that which functions or activities they have outsourced, it was difficult for all of them to answer. Most of them know about only call centers. But Regarding other activities, they didn’t have any idea. This will show that why secondary research is important.

[ 7. ] When the seventh question asked regarding the reasons for outsourcing, it was difficult for all of them to answer it because my research involves Branch Managers and Employees. Still some of them know that it was part of Down-sizing and their company wanted to reduce costs.

[ 8. ] When the eighth question was asked regarding the result of outsourcing, most of them able to tell that their manpower cost has been reduced. Branch mangers and Employees didn’t have too much idea about increased productivity, competition, better communication with customers and better resources available.

[ 9. ] When the ninth question was asked that do they agree that outsourcing is good industry for developing countries or third world nations, most of them agreed positively. Detailed result is mentioned below.

[ 10. ] When the tenth question was asked that do they think that outsourcing contains more advantages rather than disadvantages, most of them answered positively. Detailed result is mentioned as below.

Do you have any other information regarding outsourcing which you would like to share? Or any more comments?

During my primary research, there weren’t any special comment regarding outsourcing industry. Managers and Employees were not so much enthusiastic to share their thinking with my research. Still I got few feedbacks. As an example of this research with my interview with Kent (2005), Call centers in Mumbai, India are useful for their bank as they solve their query and people do not need to come to bank. But she was not about to tell regarding outsourcing strategy in detail. By such opinions one can’t reach to any final conclusion.

FROM QUANTITATIVE RESEARCH

Quantitative research has been carried out to satisfy some question related with my research objectives. It was difficult to find particular numeric data and information through qualitative research.

STRATEGIC REASONS FOR COMPANIES TO OUTSOURCE

The answer for my second research objective, how outsourcing is working as a strategy for the companies is as below.

1. Skilled manpower at lower rates

Outsourcing gives an organization the chance to get access to skilled and trained man power at extremely lower rates that will lead to an increase in productivity and save costs in a major way.

In DATAMONITOR’s report (2004), they have reported that an inbound voice agent in the US is priced at $27.00 an hour and paid $10.00 an hour whereas an equivalent Indian inbound voice agent priced at $13.25 per hour and can expect to be paid $1.20.

According to Report by Vivek (2003), In a developing country, if the capital infrastructure, including office space, telecommunications lines, and computer hardware and software, used intensively, for a call center, this approach can reduce costs by an additional 30 to 40 percent, boosting total savings to as much as 70 percent of the cost of onshore operations. The potential value for other offshored functions, like data entry, payroll processing, and financial accounting, is similar. Other detail is mentioned in Appendix F.

According to Report by Vivek (2003), The appropriate way to use the capital is to run round-the-clock shifts, even if they mean higher wages for odd hours. This option simply wouldn’t exist in a high-wage environment like in developed countries, where wage premiums offset any capital savings. We estimate that just by increasing the number of shifts, companies can reduce their operating costs by 30 to 44 percent for many types of offshore work, including financial accounting, procurement, call centers, transaction processing, and more complex functions such as knowledge services and R&D. Using multishifts a day, decreases fixed cost dramatically and company can save upto 40%-45%. Full detail is mention in Appendix G.

According to article published in telegraph (20/10/2005) about McKinsey report, which was prepared by its Indian research team, Companies can save vast amounts by relocating their divisions overseas, a software developer who costs “$60 an hour in the US costs only $6 an hour in India”.

According to India Brand Equity Foundation Copyright (2005), Nasscom had found that USA is saving a huge through outsourcing their work to offshore to India.

- Nasscom had found that when on ITES workers, US have to spend $42,927 per year; they can manage same work in India in just $6,179.

- While on administrative and general expenses, US have to spend $8,571 per year, they can manage same work in just $1,000 in India.

- On property rentals, they have to spend $1,500 in US while they can manage same thing in India in $847.

- According to Indiainfo.com (2003), With Xansa as their outsourcing partner, UK mobile phone operator O2 has reduced cost by 25%.

- According to Supriyo (2003), Standard Chartered bank saved upto 50% after outsourcing their IT and back office operations to India.

- According to Subramanyam (2003), Procter & Gamble has saved over $1 billion since 1999 by outsourcing their back office processes.

- According to Economist (2003), Thames Water has reduced IT maintenance costs by 40% in an outsourcing deal with Wipro.

2. Concentrate on Core Business

Sometimes many Back office operations of a company like payroll processing, call center, data entry and accounting are very tedious & boring and need specialized attention in every aspect of work. Most of them are very critical and important for the company’s progress. By outsourcing their back office operations businesses can concentrate on their core competencies while their back office operations are being managed smoothly by a specialized third party company.

According to Businesswire.com (2005), news announcements group of thousands of companies and organizations worldwide, Andre Olmos, general manager of CEE Sportswear, Inc. announced that, as a worldwide supplier to major retail outlet, CEE Sportswear had to meet increasing customer requirements, which had to process through multitude of standards and technologies. So they outsource their AS2 activities to GXS. So they were able to conduct B2B e-commerce transactions efficiently, enabling them to concentrate on their core business functions, and avoid the high costs associated with in-house installation and management. After implementing GXS AS2 Outsourcing service, they are able to communicate easily with their trading partner. This had improved their customer service levels for their existing customers and allowed them to expand their trading partner bas with whom they communicate via AS2. GXS offered them a simple solution that had turned a challenge into an opportunity.

3. Tax & Insurance benefits

By outsourcing their actual local works to developing countries, companies can save taxes and gain more benefits. Company didn’t have to invest in pension scheme, pay taxes to government and decrease the employee insurance

4. Increased productivity

By outsourcing their work to developing nations, companies can highly increase their productivity with better customer satisfaction and increased profitability.

According to Vivek (2003), British banking call-centers in India, process 20 percent more transactions, with 3 percent more accuracy, than afterward their counterparts do in the United Kingdom.

5. Competitive Advantages

After outsourcing work to cheaper third word countries, where labour is cheaper than local market, company can reduce the cost of various operations. Company can also provide better services to customer in order to retain them by keeping low rate. Company can use technological advantages of other country and something new to their customers.

6. Faster start-up & Development

In the developed countries, technologies are very costly and need specialized attention. If company outsource their operations, they can gain the benefit of cheaper manpower and start-up their business faster and develop it more efficiently.

7. Increase shareholder value

When companies outsourcing their in house activities, they are reducing their cost one hand and on other hand, they are increasing their productivity using more effective labour force. These will lead them towards more profit and progress and they are able to increase the shareholder value easily.

8. Cut Operational Costs

By outsourcing companies various essential functions like HR functions, Payroll Activities and Portfolio Accounting functions companies can save huge amounts of money and are free of complications that are otherwise involved in maintaining their operations.

STRATEGIC REASONS TO OUTSOURCE TO INDIA

The answer for my third research objective, how outsourcing is working as a strategy for the companies when they outsource to India is as below. Appendix H shows the list of multinational companies and their outsourcing service provider in India

1. World’s fastest growing IT services provider

India has growing number of software engineers and college graduates to satisfy many multinational companies requirement of IT services.

According to Mckinsey (2003), India has leading position as top outsourcing provider. Gartner, in its 2002 report wrote that the market opportunity for Indian vendors would grow to $25 billion by 2005. The global BPO market grew by 13% between 1999 and 2000, to $119 billion, and it will reach $234 billion in 2005.

According to Chris (2003) , “If China is becoming the workshop of the world, India is the world’s back office,”

According to Swati (2005), Indian Outsourcing and Information Technology companies have 250 of the Fortune 500 companies as their clients. The Indian Outsourcing and IT Industry had sales of $14 billion in 2003. 40%, or more than 200, of the Fortune 500 companies are currently outsourcing their service and support services to India. The trend of Outsourcing is likely to continue, as a global survey carried out by Hewitt Associates. This survey reported that more than 60% of Fortune 500 companies favoured outsourcing to India, and of those companies not currently using an off-shoring model, 71% intend to do so sooner rather than later.

2. India’s talent pool specially in Information Technology

India has its own advantage of increasing amount of software engineers and young college graduates, specially the amount that is familiar with English language. According to Diana (2005), India’s pool of young university graduates is estimated at 14 million -the largest of all 28 countries MGI (Mckinsey Global Institute) has studied. It is 1.5 times the size of China’s and almost twice that of the United States. This huge number of young graduates is increasing by 2.5 million new ones every year.

3. Quality Assurance and security

In India, outsourcing service provider companies are very much concerned about quality, assurance and security. These concepts are taken very seriously in developed countries like USA, UK and other European countries.

According to DATAMONITOR (2005), Firms in the UK and US market have understandably been preoccupied with concerns about data security, the ability of offshore operations to deliver to the same standard as back home and the quality of interactions between their call centers and customers.

According to DATAMONITOR (2005), there is a very strong engineering mindset prevalent in India, which lends itself to process improvement work, which is why many of the respondents in our survey already have regulatory compliance and continual improvement initiatives embedded in their operations. Many firms actually either already have programs in place or are undertaking steps towards certification presently in one or more of the following areas:

o Six Sigma TQM, which is aimed primarily at reducing defects and cycle-times;

o BS7799 and various ISO standards on information and data security management;

o COPC certification aimed at BPO operation.

4. Advanced technologies at lower rates

Multinational companies can gain various technological advantages as lower rates by outsourcing their current work to developing countries.

ADEVANTAGES FOR INDIA

The answer for my forth research objective, how outsourcing is working as a strategy for India when companies outsource to India is mentioned as below.

1. Employment

Outsourcing industry has been created remarkable employment opportunities in India. It has been growing year by year.

As Per McKinsey report (2003), total number of people employed in outsourcing industry was 1.0 million in 2001. And McKinsey is expecting to be 4.0 million in 2008. Other details are mentioned in Appendix D.

According to Grant (2003), the computer industry body, India’s rise has been remarkable. Some 100,000 people are thought to be employed in call centres in
2003.

According to BBC News (22/12/2005), Outsourcing sector will employ about 2.3m workers by 2010, compared to 700,000 now.

2. Forex

Offshoring industry has been known as Information Technology in India. It has been contributing lots of Foreign Exchange in India’s economy

As Per McKinsey report (2003), offshore industry was contributing 6 Billion to the India’s FOREX industry and will increase up to 61 Billion in 2008 as per McKinsey research. Other details are mentioned in Appendix D.

According to Grant (2003), a recent study by Deloitte, By 2008, financial services firms are expected to transfer $356bn, or some 15 per cent of their total cost basis, to less developed countries.

3. Increased GDP

Outsourcing has been contributing a lot into India’s economy. India’s GDP has been increasing a lot due to outsourcing.

According to McKinsey report (2003), Offshore IT business consists of 1.4% of total India’s GDF in 2001 and believed to be increased up to 7% by 2008. Other details are mentioned in Appendix D.

According to BBC News (22/12/2005), IT and outsourcing could more than double to 7% of India’s GDP by 2010 and account for 44% of export growth.

OUTSOURCING IN BANKING SECTOR & HSBC BANK

The answer for my fifth research objective, how outsourcing is working as a strategy forBanking sector and for HSBC bank is mentioned below.

Banking Sector

Many banks in various parts of the world are choosing to outsource the business processes in the back office as a way to reduce expense, gain access to updated technologies, reduce risk and improve their flexibility.

The major function which compelled bank to start outsourcing is Telephone banking. They started their call center outside country specially in India to maintain low cost & defeat competition. They are also running their other functions offshore like IT, HR, Data Entry and many more. Some of the banks had completely transferred all services to offshore locations.

Worlds major banks like City Group, HSBC and many more has their offshore centers in India and many more countries.

According to Grant (2003), Citibank had employed 3,000 people in India in call centers and processing operations in Mumbai and Chennai. It has helped the group become the world’s most profitable financial services firm: its revenues have grown by $35bn in the past five years, while costs have increased by just $12bn. Banks such as Citigroup and HSBC are transferring even more jobs.

According to Swati (2005), ABN AMRO Bank has outsourced their operations from about 18 countries to its back offices in India in Chennai, Mumbai and Delhi. The head count in these centers is about 1,200.

According to Mohan (2003), UK’s 2 leading banks, Lloyds TSB and Barclays had announced in 2003 to shift more than 1000 banking jobs to India as part of outsourcing strategy to cut the cost. Lloyds announced in 2003 that, they are going to close their Newcastle call center employing 986 people at the end of 2004.

According to Forbes (18/5/2005), Australia’s one of the leading bank ANZ has an IT subsidiary in Bangalore which employs more than 500 people.

According to Grant (2003) and The Economic Times (2003), Standard Chartered, had operations in 50 countries with 2 huge processing centers in Chennai and Kuala Lumpur in 2003.

Various Back Office Banking Outsourcing Contents

- Telephone Banking

- Customer Services

- Mortgage Application Processing

- Loan Application Processing

- Payroll maintenance

- Finance & Accounting Handing

HSBC Bank

HSBC Back Ground

World’s Second largest bank HSBC has over 9,500 offices worldwide in 80 countries.

HSBC offers financial services to personal, commercial, corporate, intuitional, investment and private banking clients

HSBC’s decision mirrors similar offshore outsourcing moves by other British companies such as British Telecom and Prudential.

HSBC’s offshore centers in Bangalore, Hyderabad, Kolkata, Vizag, has over 8,000 employees according to bpoindia.org

How Outsourcing working as a strategy for HSBC

As a global bank, HSBC is facing increasing pressure from customer to provide better services, pressure from competitors and rivals like Citibank and for the satisfaction of shareholders made HSBC to think creatively to thing about outsourcing as a serious strategy to go for it to cut the cost, increase the productivity and gain customer satisfaction.

HSBC transfer their many business operations like processing work and call center inquires to south Asian countries. HSBC has its own units in India, Malaysia, China and Vietnam to finish their work from USA, UK and other developed nations.

According to Keith (2003), “the outgoing chief executive of HSBC, provoked outrage when he appeared to suggest the bank’s Indian workers were harder working and superior to their British counterparts.”

According to BBC News (5/4/2004), HSBC uses its own bank staff in India, and does not outsource their work to the third parties. “We are confident that all staff, whether here or in India, exercise the same levels of confidentiality and customer protection” said an HSBC spokeswoman.

HSBC’s Employment Structure & Salary Structure is mentioned below.

Employment Structure of HSBC staff at Asian Offshore centers

1. Global Offshore Center

According to Julia (2003) and BBC News (17/10/2003), HSBC announced to outsource 4,000 customer service jobs to Asia. 1,500 jobs will go in 2004, a further 2,000 in 2005 and a further 500 in 2006. These jobs will be lost from centers like Swansea, Birmingham, Sheffield and Brentwood. It has also mentioned that, by the end of year 2006, HSBC expects about 87% (48,000) of its staff to be based in the UK and about 13% (7,000) to be in service centres in Asia. By this strategy, works like data processing, computer inputting and admin can be done for a fifth of the cost.

According to leading independent newswire and information source Finextra.com (2005) and Financial Express (16/3/2005) HSBC had currently 13,000 staff across 10 back office centers in Asia providing mainly telephone support and clerical services. HSBC has 4 service centers in India, 3 in China and 1-1-1 each in
Malaysia, Philippines and Sri Lanka. HSBC is going to open 5th India center in Calcutta in November (So I think it has been working by now). According to Financial Express (16/3/2005), HSBC chief operating officer Alan Jebson announced that HSBC is also considering opening a new offshore unit in Vietnam which has low costs and populations of English and French speakers. This expansion of HSBC’s offshore operations is part of 4 year $1bn cost cutting programme implemented at bank in 2003. Jebson also mentioned that bank saves about $20,000 for every job it moves offshore.

According to Financial Express (16/3/2005), HSBC Bank is planning to double their Asian back-office workforce in three years and move more clerical jobs in the West to help it save more than $1 billion.

2. Indian Offshore Center

According to David (2002), CNN news, HSBC employed 1,000 people in India in Outsourcing sector.

According to Grant (2003) and The Economic Times (25/5/2003), HSBC employed 9,500 call center and processing staff in developing countries at the end of
2003 which included 5,500 in India.

According to Julia (2003), HSBC’s Hyderabad centre will have 2,600 staff by the end of the year 2003. There would be another 1,900 in Bangalore. A new office is under construction in Vishakhapatnam, east of Hyderabad.

According to leading independent newswire and information source Finextra.com (2005) and Financial Express (16/3/2005) HSBC have 4 service offshore centers in India and going to open 5th India center in Calcutta in November (So I think it has been working by now)

3. China Offshore Center

According to Grant (2003) and The Economic Times (25/5/2003), HSBC employed 9,500 call center and processing staff in developing countries at the end of
2003 which included 3,500 in China.

According to Julia (2003), HSBC’s Guangzhou offshore center has 2,800 employees.

4. Sri Lankan Offshore Center

According to Forbes (12/6/2005), HSBC had launched call center in Sri Lanka. It was 11th call center. The HSBC unit is currently the biggest call center in Sri Lanka in terms of Employee with 1,326 staff. They have 1,666 seats with room to expand to recruit 3,000 staffers.

According to Malcolm Wagget, HSBC’s chief operating office for South Asia, in article in Forbes (12/6/2005), The Sri Lankan unit is primarily banking operation to service their operations in USA and UK. They don’t have plans to add more centers next year because they have adequate capacity in Sri Lanka and India.

According to Forbes (12/6/2005), with around 30 operators, Sri Lanka’s business process outsourcing (BPO) is worth about 100 MLN USD, according to a survey conducted by the local Information Communication and Technology Agency (ICTA). For Sri Lanka, much of the outsourcing business is from Europe, Scandinavia and Australia. Sri Lanka dispenses with minimum investment requirements for BPO operations, with three-year tax holidays thrown in as an added incentive.

5. Malaysian Offshore Center

According to Julia (2003), a centre in Kuala Lumpur with 600 staff has just opened.

According to leading independent newswire and information source Finextra.com (2005), HSBC have 1 offshore center in Malaysia providing mainly telephone
support and clerical services.

According to The Financial Express (16/3/2005), HSBC’s Chief Operating Officer Alan Jebson reported that HSBC have biggest global service centre employing about 2,000 people in Malaysia, has a target to save more than $1 billion in the four years ending December 2007.

6. Vietnam Offshore Center

According to an article in leading independent newswire and information source Finextra.com (2005), HSBC’s chief operating officer Alan Jebson, HSBC is also considering opening a new offshore unit in Vietnam which has low costs and populations of English and French speakers.

Controversial Data

According to Grant, Daily Telegraph (2003) and Economic Times (2003), HSBC employed 9,500 call center and processing staff in developing countries at the
end of 2003 which included 5,500 in India and 3,500 in China.

According to Julia (2003), HSBC’s Hyderabad centre will have 2,600 staff by the end of the year 2003. There would be another 1,900 in Bangalore and 2,800 in
Guangzhou and Shanghai in China.

Both newspaper Telegraph and Guardian, have mentioned different amount of staff in centers of Asia. This is shows that HSBC is very particular and secret in terms Outsourcing strategy. According to Grant (2003), Daily Telegraph, there were 5,500 people in India and 3,500 in china who work for HSBC. While According to Julia (2003), Guardian, there were 4,500 employed in India and 2,800 people employed in China by HSBC.

Salary Structure of HSBC staff at Indian Offshore centers

According to Julia (2003), there has been a huge salary differentiation between UK and India. A normal annual employee in UK costs HSBC near £18,000. While in India, its only £2,500. In UK, 80% of staff is female and many are part-time. But in India, it is split 50:50 male and female. In India, average age is 23, most are single and nearly every one is a graduate. According to local standards, they are paid well.

According to Financial Express (16/3/2005) and BBC News (16/3/2005), HSBC’s Chief Operating Officer Alan Jebson reported that bank is saving near $20,000
for every job they outsourced.

HSBC’s Offshore Outsourcing Offices in India

HSBC’s Outsourcing Offices in
India

[ 5 ] CONCLUSION

If you want to outsource essential work of your business process, you shouldn’t make it just like that in hurry. You have to develop a strategy for that, in depth plan for that.

During my research, outsourcing as a strategy, I have developed a model which describes successful steps towards outsourcing process. I think various finding of this research is supporting it strongly.

Nine Steps to a successful offshore Outsourcing

1] Construct Outsourcing Strategy

2] Find Out Offshore Project

3] Prepare Objectives for Outsourcing

4] Prepare Requirements of Outsourcing Projects

5] Investigate overseas markets

6] Choose Country, then service provider

7] Negotiate Offshoring contract

8] Transfer services to offshore

9] Manage Performance

Irving (1996) has also given useful model, which is mentioned in Appendix C, is useful before organization has started outsourcing.

Various factors after researching regarding strategy, I can think before deciding outsourcing, below thing should be concerned.

1. The cost of offshore center should be lower than local center.

2. The offshore center should be safe

3. The offshore center should maintain local rules & regulation like data protection.

Outsourcing is working as a very strong corporate strategy. There are many benefits of outsourcing like cheaper manpower at lower costs, increased productivity, availability of labour, focus on core business and many more as mentioned in Findings section.

Outsourcing to India is also very strong pool to gain market share. Companies can gain many advantages like skilled labour and easy access to technology.

Accepting outsourcing as an Industry is also working as good strategy for India. People of India can easily get employment benefits.

[ 6 ] RECOMENDATION

After considering all the pros and cons of Outsourcing, it can be described as one of the best strategy for the corporate world. Apart of low cost, there are many other advantages like increased productivity, pool of labour and government benefits. So in this competitive world, each and every company should think about accepting outsourcing as pioneer strategy. There are many countries which are providing outsourcing services. But before finalizing any outsourcing service provider, organization should think about all positive and negative point of each and every service provider and country.

India can be described as one of the best outsourcing provider. All my research regarding Outsourcing gives me sign favoring India. India has a large pool of computer literate and English speaking professionals. Government encourages the growth of IT Industry in all aspects. The Infrastructure and other requirements are fast meeting the stipulations. Moreover, India boasts of the highest number of IT savvy people in the world. India is the only country where a vast combination of skill sets is easily available. In other countries, say China, the availability of combo skills is difficult.