Economic crisis in West triggers outsourcing business surge in India

October 13, 2011: It is quite obvious that the developing economies are feeling the pain of the continuing economic downturn. But certain business segments in the developing world are delighted with the opportunities that have come up as a result of ongoing economic downturn. During times of recession outsourcing has always soared high as organizations place primary importance in cost cutting. This downturn is no different from previous times as it has opened up an arena of additional opportunities to the Indian outsourcing companies from legal support services to IT support.

As stated by R Ramkumar, vice-president of corporate marketing, research and communication at Cognizant, India’s position in the outsourcing business is boosted with every downturn. Recession leads to cost cutting measures employed by the organization which results in increased off shoring. What normally happens is that organizations go for broader services from vendors across the globe.

Companies focused on improving efficiency during 2001-02 during which application maintenance and support was provided by IT outsourcing service providers. But effectiveness was demanded in addition to efficiency from 2002 to 2007. This paved the way for ERP and CRM systems requirement. As a result innovation and growth has gained importance in addition to efficiency and effectiveness. Customers have become for cost conscious and demands more service at low costs, he added.

Rahul Kanodia, CEO of Datamatics Global Services which operates in the publishing vertical agrees to this and adds that increased demand in this segment has increased the confidence.

Industry statistics indicates that the publishing services sector amounted to $780 million during 2008 and the forecast show that it is expected to grow by 35 per cent till 2012. There are 35,000 people employed in this sector. In publishing industry India leads the folk followed by Philippines, China, Vietnam and Sri Lanka.

In some cases demand is the key driving force behind off shoring work. Renuka Krishna, associate vice president of KPIT Cummins Infosystems says that, they have been moving workforce offshore for the previous year. She said that this will continue till the demand meets requirement and as long as it provides cost savings to the client.

The Legal Process outsourcing (LPO) is another segment that is benefited because of the downturn in the US and Europe. The industry worth $ one billion and expects grow at 30 to 50 percent in the near future.     

According to Sanjay Kamlani, co-CEO of an LPO firm Pangea3 almost all financial institutions are caught in the recession and they have no other way than outsourcing the processes. Moreover Law firms can gain cost savings up to 90 percent by outsourcing their processes. 

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