Business Standard

SWOT analysis | India as an offshoring destination

North American and European cos will move 750,000 jobs to India and other low-cost nations by 2016

BS Reporter New Delhi
With its rich experience in offshore services and an enviable talent pool to boot, India is one of the most sought-after offshoring destinations. As international firms are focusing on lowering costs, there has been a flow of offshoring, especially of non-critical roles,to low-cost nations.

According to US-based Hackett Group Inc, North American and European companies will move 750,000 jobs in IT, finance and other business services to India and other low-cost nations by 2016.

Here is a SWOT analysis of India:

Strengths
. Skilled workforce and huge talent pool (4.4 mn graduates and postgraduates join the workforce annually)
Specialised labour pool from existing KPOs (India was the first to enter the outsourcing and offshoring market)
 
Favourable and supportive policies for offshoring
Larger English-speaking workforce, compared to other offshore destinations
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Graphics | New business services jobs moving to low-cost geographies, 2012 - 16 (%)
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Weaknesses
Time-zone difference with the US
Focusing on developing infrastructure in tier-II cities, but experienced talent pool is not ready to move there
Tier-II cities lack in skill availability at mid- and senior-level management
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Graphics | Countries preferred by various organisations for offshore finance functions

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Opportunities
Tier-II cities are one of the most cost-effective destinations in the world
Increase in workforce and talent pool in tier-II cities

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Graphics | India's talent pool FY12 (%) (total 4.4 million)

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Threats
Rising operating costs in tier-I cities (salary increase and rise in rentals)
Competition from new offshoring locations such as China and the Philippines


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Graphics | Operating cost per FTE for transactional KPO services, 2011 ($ ‘000) (per annum)
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Graphics | Operating cost per FTE for IT services, 2011 ($ ‘000) (per annum)
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First Published: Jul 03 2013 | 1:05 PM IST

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