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Offshore Outsourcing Model

OFFSHORE OUTSOURCING MODEL

Most online businesses today opt to adopt the Offshore Outsourcing Model to maximize cost as well as provide a higher level of quality service regardless of their market’s location and size. If this term is not yet familiar to you, you may start to question what exactly Offshore Outsourcing Model is, how does it work, and why is it becoming a popular choice among businesses? Read on and learn how this model can bring you a lot of benefits.

Offshore Outsourcing Model – An Overview

In order to reap better quality as well as save more cost, most business companies these days opts for Offshore Outsourcing. This kind of modern business approach allows the company to assign or outsource commercial tasks to offshore companies who are expert in a certain field. This results in a much more efficient work and is cost-efficient.

The inner core of the Offshore Outsourcing Model is “Hire rather than own expertise.” Instead of investing too much time and money in developing or maintaining certain non-priority activities, business owners can hand them over to experts to reap better quality of products at a lower cost.

One of the renowned analysis and research organization in the world, Gartner, says that in 2009 a lump sum of $50 Billion will be spent for outsourcing IT-related services around the globe. A number of countries such as Russia, China, India, and Brazil, according to the report, are said to be capable of producing labor, infrastructure, as well as technology to successfully support IT outsourcing activities.

Advantages of the Offshore Outsourcing Model

By implementing the Offshore Outsourcing Model, businesses can reap a lot of benefits when it comes to Technical Excellence, Cost, and Quality. Listed below are some of the great advantages of applying the Offshore Outsourcing Model:

  • High Quality of Product Delivery by offshore companies using their expertise, extensive domain knowledge and implementation of Matured Execution Models in their processes. (Source: NASSCOM).
  • Maximum time benefit by leveraging the time difference between service provider and service requester.
  • Operational Flexibility by quickly adapting to changes in business requirements.
  • Improved competitiveness since offshore companies deliver quality services at affordable rates.
  • Realistic cost savings of about 40% as compared to onshore or domestic markets. (Source – Ventoro Research Report)
  • Technical Excellence offered to clients by capitalizing on quality Human Resource, robust infrastructure and domain related Research and Development (R&D).
  • Reduced project cycle by implementing globally recognized Project Management systems in their operational activities.
  • Better finance management through clearly defined financial obligation and reduced cost.
  • Renewed focus on implementing company strategies by outsourcing certain non-core business operations to offshore companies.
  • A good opportunity to expose business into new markets through networking and having connections with offshore companies while exploring other business prospects.

Implementation of the Offshore Outsourcing Model – How it Works in Business

The Offshore Outsourcing Model, as previously mentioned, is basically about “Hire rather than own expertise.” By implanting this kind of business approach, other commercial activities of the company can be transferred or outsourced to companies who are much more experts in a specific task.

Once implemented, businesses can have more time to focus on their company growth and other priority activities rather than investing additional time to non-core activities. Aside from reaping out the highest quality of services, businesses can also save a lot of time and money.

India Advantages

India is known in the business world as the “Mecca of Offshore and Outsourcing.” A report from Forrester which was conducted way back in November 2001 explains that India excels, as compared to the other competing countries, in the IT-related services due to its years of expertise in the field plus their supportive Government policy, mastery of the English language, infrastructure, and higher level of quality services. (Source: NASSCOM)

We have summarized below some of the many reasons that makes India an ideal place to outsource business activities:

  • Maximum Cost Advantage. According to a certain reliable report, American companies gain about $1.14, including both the indirect and direct benefits, for every $1 worth of investment in India through offshore outsourcing. (Source: NASSCOM)
  • Friendly Government Policies for Offshore Outsourcing in the IT and ITES industry by providing a number of SOPs and tax benefits
  • Quality Manpower through good language command, strong technical skills, and eagerness to accommodate Clients
  • Decade old Experience in Offshore and Outsourcing which makes India prominent in the outsourcing business
  • Large Human Resource through its 17 Million populations available in the IT industry by 2008. (Source: NASSCOM)
  • Incorporation of Quality Standards such as the globally recognized P-CMM Levels, SEI-CMM, and ISO 9000 Certification by a number of IT companies in India which provides assurance for high quality of services. According to reports, India had already a total of 42 companies that had gained SEI CMM Level 5 assessment as well as 316 companies who have earned quality certification around the globe.
  • Address security concerns which legalizes laws and policies concerning to data crimes and securities as stated through the IT Act of 2000.
  • Strong Education System which highlights fluency of the English language and strong backgrounds in science and mathematics.

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