India benefiting from person to person outsourcing

In 1776 in his book named as the wealth of nation Adam smith propagated the competitive advantage theory, which championed the division of labour and specialization of work, which add to the economies of scale when there is a production done in a huge scale. However, in that theory, which he proposed, laid hidden a far more vital idea which today claims to be the reason behind 7% of India’s GDP in the year 2007. yes we are talking about outsourcing, which in the days of Adam Smith meant, a particular part of the entire production process, was meant to be dealt by a particular group of workers who are specialized in that part of the job.

Nevertheless, you have to agree that ever since 1776, the definition of outsourcing as undergone a quantum change. Before we proceed let us have a brief idea about what is the meaning of outsourcing, this for those who are not very familiar wit the term. In the process of production, there are various subordinate processes, which contribute to the primary output. However, it is not possible for many firms to pay equal attention to every department. So in the face of this kind of situation they tend to outsource or hand over a particular part of the production process to another firm who are specialized in that particular category, thus giving it the responsibility for the design and implementation of that process. In this way the outsourcing firm saves a lot of money and time too, which it invests in some other areas, whereas the firm which is providing the outsourcing service is also earning huge profits owing to external economies, which comes from the highly specialized but cheap labor.

Now that we have discussed the main idea, let look at the outsourcing background of India. The wave of globalization first kissed the Indian soil in the early 1990’s and After the initial boost, the next successive governments have pursued the trend of economic reform toward liberalization and privatization of public sectors. Even till the year 1994 the indian telecom sector was under the government control and they were enjoying a monopoly in this field, which was a major reason for the lack of growth in the IT Sector of the Indian economy. Nonetheless it was in this year owing to a policy of the existing government their was considerable liberalization in the field of telecom and
private participation was encouraged, and thus started the upward growth of the IT sector. Then in the year of 1999 the new IP telephony was introduced under the ‘new telecom policy’, which kind of terminated the monopoly of the state government on the international calling facilities. Now this step structured a huge cut in the calling expenses and heralded the golden era of the IT industry. And thus started the sudden spurt of inbound and outbound call centers and data processing centers.

IT industry has been in the Indian industrial Diaspora ever since the 1980’s but it was in the late 1990’s decade that there was a significant growth in the outsourcing industry. The few of the first outsourcing services were medical transcription, data processing, and medical billing and of course, customer support, which happened when some of the MNCs established their very own subsidiary in the Indian subcontinent to cater to the outsourcing needs of their parent companies. Some of the premier players in this sector were, American express, GE capital and British airways. The ITES and the BPO sector are nourishing the Indian economy since the last ten years and ever since then it has been growing phenomenally. Now it has become a major portion of the export oriented IT software and services, which are outsourced from India.

For quite a lot of time this outsourcing was constricted to only the MNCs, but today the scenario has changed considerably. Today it has a broad base, which is backed by the Indian IT companies and other third party service providers. All through this quagmire, in the recent time came out yet another innovative concept, this has a potential of taking our country to great heights. The new concept is outsourcing at the micro level, or more popularly known as Person to person out sourcing. This particular form of outsourcing is aimed at catering to the need of the upcoming small-scale industries who cannot handle all of their work owing to their lack of capital and skill. PPO has immense scope of being a very successful venture in India owing to the following reasons:

• India is a storehouse of English speaking, technically proficient, and skilled work force. We have excess supply of labour over here and hence cheap labor is available. This a strong point, which attracts a lot foreign, companied to open up their outsourcing subsidiaries here.
• Here we have high-end telecom infrastructure, which is at par with the international standard. So, we are not technologically challenged.
• Here the human capital is high and the market is extremely competitive, so we have quality labour that is constantly measuring and monitoring quality target. Speaking in the language of economics labour here technologically much progressed.
• The geographic location of India is such that it provides enough advantage to give 24×7 services, catering to all the clients coming from various time zones.
• In India, we have liberalized policies and rules in the fields of outsourcing. That means less legal hazards and simplified rule and norms.
• Moreover, the best part is that over here we have friendly tax structure, which places the outsourcing industries on par with IT, companies.