In this global village, an action in one country always has consequences in other regions. The jittery environment in offshore companies in India has moved into the territory of uncertainty with the introduction of the 2013 US budget.
Most of the business processes outsourced to India originates in the United States of America. The US budget therefore has a direct relation with the amount of business that is moved to offshore companies.
The current environment in the US towards moving business processes out of the country is not conducive to say the least. With the job deficiencies and the economic crunch, people are looking to move jobs back to the homeland. The 2013 budget certainly supports creating new jobs within the US.
The US budget changes
President Obama, in the course of numerous speeches made it clear that he intended to create more jobs in the United States by discouraging outsourcing and the use of work visas. The tax benefits or evasion of paying taxes for the income gained overseas is what boosted moving portions of business overseas. With the current budget offering tax benefits to companies that do not outsource businesses and a crunch on the tax deferral, companies are beginning to reassess the importance of offshoring.
Between the budget cuts and the tax benefits, entire projects are on hold and there are even rumors about reverting offshore companies to the mainland. With the US companies looking for new ways to save money, the Indian companies have to rethink their strategies to retain business.
How the outsourcing future of India is changing
Nearly a decade ago, outsourcing began in India. Since then a lot of changes have happened across the world. India stood undefeated initially, as the champion of exported business processes. Soon various other countries caught up to the idea of offshoring business processes. With the stiff competition from companies across the world and the US budget announcement, India has to step up the game in order remain in the arena of outsourcing.
Given the uncertainty in the offshore companies in India, there has been a surge of new policies and ideas to boost the sector. Revitalizing strategies and renewing energies into making the business model work is of tantamount importance. Strategists across all the offshore companies are hard at work trying to retain business.
The root cause of outsourcing losing favor was examined and a lot of companies have decided to make changes ahead of the impending contract renewals. Some of the main problems that caused US companies to rethink offshoring were lack of transparency, a lack of control over the process, inadequate communication and inefficient execution.
The efforts to make offshoring business processes to India look viable again are taking shape through policy changes. The business models that were drawn up a decade ago have lost relevance and feasibility. New strategies and work models are replacing the tried and tested ones. The ambiguity in how the business models will pan out is very real and anybody’s guess at the moment.
More and more Indian companies are setting up representative offices in US with key staff positions. Having a branch on site will ensure the parent companies that they will have better control over the business process. Communication lines will be stronger as face to face interactions and real time interactions are now possible. Being closer to the customer ensures a higher transparency with regard to the process and the staff. Changing strategy, and business process modules will be far easier as the efficiency of the entire process gets a manifold boost.
Although having contact centers on site may increase company costs, the overall benefits usually outweigh the costs involved. The staff engaged in high-end services are often better placed closer to the parent company. This might just prove to be a business move that turns the fading fortunes of outsourcing in India around.
These changes in policies and strategies in order to retain business is not only a trend in the large companies, medium and small sized companies are also pulling out all the stops. Besides improving functionality, cost cutting is a major concern as that is the only reason for the existence of outsourcing.
The future of outsourcing in India 2013
Despite all the flak that outsourcing is receiving in the US, it remains a very viable means of getting business on track. India has competition in the offshore market from various other countries across the world. What sets India apart, however, is that the software and IT talent is already trained and comes at an affordable cost. There are also a large number of certified and legal IT and software companies lending credibility to outsourcing jobs to India. Over 40% of start-up companies in the US and more than half of the world’s Fortune 500 companies rely on India for providing offshore professionals. With the crème de la crème of IT companies in India, outsourcing will always remain a part of the economy.
With the future of outsourcing across the world on unstable ground, Indian companies can rest assured that the world is aware of the credibility associated with them.
Despite the obvious discouragement for outsourcing in the US budget and political stance, India remains optimistic about outsourced jobs. The national association of software and service companies (Nasscom) is of the belief that the economic slowdown in the US will benefit Indian companies. The companies based in US will be looking to save more money now than ever before and offshoring jobs is a great way to save on various costs. The trade body and the industry at large remains optimistic about the sector’s growth.