IT outsourcing is still in style and it is expected to be the trend going forward. Why? Even amid the recovery when companies are looking for a break to cut costs, outsourcing IT to top software development companies makes sense.
It allows companies to concentrate fully on core competencies while having peripheral tasks like IT and software handled by software developers. More importantly, most U.S. companies are not good at conducting IT work. When there are so many engineers in India who are willing to work for a fraction of what American employees are making, companies are buying into the idea of IT outsourcing.
This is amid a debate to insource or to bring back U.S. jobs as unemployment rates are skyrocketing with California having the highest unemployment rate. The Obama administration has also tried to make a claim that outsourcing will mean revoking tax breaks for MNCs. But the problem there is that large corporations are not the only ones involved in outsourcing. It will also affect small and medium businesses as well. In the latest of proposed regulations, the Schumer bill puts a tax on call centers operating outside the U.S. Many skeptics that this defeats the purpose of having call centers in places like the Philippines and India.
Despite the government’s attempts to bring U.S. jobs back home, companies are now more competitive than ever. And the recent recession has everyone thinking about cost savings. Having said that, it is important to acknowledge outsourcing IT as something that reduces costs a great deal. Companies hurt by profit losses have an obligation to their shareholders and may have little room to listen to rhetoric on protectionism or patriotism, as some lawmakers would suggest.
The next few years are all about cost cutting. And that will mean jobs at home and abroad. One manager of a Californian outsourcing firm said that if there were no alternative to outsourcing, it would mean that there would be a freeze on hiring. And that could be worse than the present situation.
IT outsourcing is making more of an impact as companies are seeking cost cutting measures from their vendors. The vendor-buyer relationship is also a lot more sophisticated now, so that aspects of outsourcing to software development firms are precisely defined. This is mutually beneficial for both parties involved.
Although companies might consider outsourcing their customer service center or HR department, it makes more sense to outsource IT. The topmost advantage in outsourcing to India is that the pay is much lower. Moreover, there are a host of problems when outsourcing a help desk. For instance, the employee in India or Philippines may not understand the American consumer. The American consumer has a psychology of his own and if that awareness does not come through in the phone call, the customer is likely to disappointed. In addition, there is also a rationale that has to be right to accomplish marketing. This might also be different in different countries.
Nonetheless, IT is all about machines so there is little disparity when relating to machines across the world. In this sense, outsourcing IT makes it a homogenous process. Even if a PHP programmer does not speak good English, he is likely to perform well in his assigned programming task. Although there is a slight risk involved, it is still a benign risk. For this reason alone, outsourcing to India has a fairly high degree of potential success because the country has experienced firms and has been dominating the outsourcing landscape for the last ten years.
The most common advantage of outsourcing IT is the savings and cost efficiency. Considering the contracts that have to be signed inhouse, outsourcing is a less tedious task because it leaves out hiring permanent employees with benefits like medical insurance. For the most part, when you outsource IT, your total costs will come down.
More than that, outsourcing IT translates into concentrating full on the core business of a firm. This is where most of the revenue comes from and this is where the focus should be. With IT out of the way, the company is free to strategize on more important objectives. It takes a great deal of effort to manage a company’s entire operations because it requires good planning, good decision-making, and close attention to detail. When you outsourcing, the BPO firms are able to bring in their talent and skills along with the experience they have.