“The important part about outsourcing or global sourcing is that it becomes a very powerful tool to leverage talent, improve productivity and reduce work cycles.” — Aziz Premji, Chairman, Wipro Ltd.
This quote from Aziz Premji, one of the pioneers of the outsourcing business model in India and the world, summarizes the importance of outsourcing pretty well—and illustrates why it’s a timely idea again.
The concept of outsourcing itself is not new and gained prominence in the 1970s and 1980s when the U.S. exported jobs to Latin America, Korea, Singapore and other low-cost, developed countries. Manufacturing activities, too, were outsourced by the U.S. to China due to its low labor costs and special incentives provided to the investors by China.
India, in fact, is a late entrant to the world of outsourcing and gained prominence as an outsourcing destination due to the Y2K problem. Since then, India has carved a distinct place for itself in the outsourcing industry worldwide. That is due to the availability of highly talented IT professionals with good communication and language skills, and lower hiring costs.
The stigmas that keep American companies from outsourcing to Indian staffing firms
Unfortunately, some American businesses are reluctant to outsource their jobs to Indian staffing firms. The reason for this is more cultural and political than business focused.
The misconception that outsourcing jobs to India will lead to higher unemployment in the U.S. is partly to blame for the negativity surrounding the outsourcing industry. Politicians, concerned more about their constituents and a voter backlash than the industry’s benefits, are also why American companies are reluctant to outsource to Indian staffing firms.
Lack of knowledge about outsourcing and its immense benefits makes them criticize the outsourcing industry without ascertaining the facts. So prejudiced were politicians that there were nearly 200 pieces of legislation against outsourcing in the U.S. Congress and state legislatures in 2004.
Another factor that makes American companies reluctant to outsource their staffing needs is the perceived notion that their customers will not understand an Indian accent.
Addressing the misconceptions
It’s important to understand that most of the jobs outsourced to India are for support functions, except for the IT industry, which also focuses on research and development. As such, high-level and high-paying jobs are still retained by American companies for their internal core and product development teams. Thanks to the Great Resignation, more of those jobs are available for Americans today. Earlier, the lack of top-level opportunities had many Americans applying for lower-paying jobs to avoid unemployment.
Moreover, the cost savings derived from outsourcing jobs to India is passed on by companies to their customers through lower and more affordable prices for their products and services. That has helped increase the buying capacity of consumers while increasing sales for companies. The result: more job creation for Americans at a higher level.
As for the Indian accent issue, the best Indian outsourcing firms focus on candidates who have excellent English skills and can communicate effectively with their U.S. counterparts.
Companies in the U.S. that outsource to India enjoy substantial cost savings and benefit from faster project turnaround times. They also get the advantage of hiring well-trained and experienced talent for their companies without spending hours on recruiting.
A prominent case study that highlights how remote assistance is beneficial is that of Delta Airlines. In 2003, it was one of the first American companies to outsource its staffing requirements to India. Delta Airlines outsourced its entire worldwide reservations service to Wipro Spectramind’s Mumbai call center. It was a move that helped Delta save $26 million in a single year.
Another case study worth mentioning is an accounting firm based in the U.S. that works with non-governmental organizations (NGO) to help them better manage their finances. The company outsources most of its administrative and marketing tasks to Wishup, including organizing webinars on its behalf.
That helps the accounting firm focus more on its core skills, i.e., providing accounting solutions. In addition, the time saved by outsourcing allows the company to network with potential clients and grow the business.
Advantages for small businesses and startups
One needs to compare these advantages with the problems associated with hiring in America. High salaries, healthcare and other financial benefits are a significant drain on the limited resources available to small businesses and startups, in particular.
The high staff turnover rates for industries such as information (44.8%), real estate/rental and leasing (49.4%), and professional and business services (69.2%) are also a matter of concern for American companies. Due to these high attrition rates, U.S. companies need to keep hiring and maintain or outsource a training and staffing solution, which is not always feasible.
The most obvious reason for outsourcing to India is the cost-benefit vis-à-vis hiring in America. But there are other significant advantages in terms of higher productivity levels, better time management and a different time zone.
By outsourcing their daily routine tasks such as checking emails, following up with vendors, providing customer support and accounting needs, business owners can save a substantial amount of time. The time saved could be used for focusing on growing their businesses and networking with customers.
Being able to delegate unimportant tasks also helps the business owners in better time and project management. They can now spend their time and energy on more productive tasks that need their attention.
What also works in their favor is the different time zones. They can assign tasks to their remote assistants before signing off and get them completed by their remote team overnight. As a result, most of their tasks will be ready to be reviewed when they begin work the next day.
American businesses can also benefit immensely due to India’s high-quality, experienced and skilled talent. Indian workers are respected and acknowledged worldwide for their dedication, education levels and technical knowledge, which give them a competitive edge over other countries.
How to be successful at outsourcing
As always, it’s important to conduct proper due diligence when looking to outsource. One of the critical factors that companies need to consider is the availability of an adequate, well-trained, English-speaking workforce.
This is an area where India enjoys a distinct advantage. India’s highly competitive educational system and enormous English-speaking population make it a natural partner for highly demanding U.S. employers.
The second most crucial factor American companies need to consider is whether the potential remote assistants are up to date on the latest virtual assistant skills. They should also have the means to upskill themselves if required. Being proficient with the latest social media tools can be a significant advantage and help companies outsource their lead generation tasks.
Reliable internet connectivity and communication tools are also something that outsourcing committees need to consider. With high internet connectivity levels and data usage charges being amongst the lowest globally, Indians enjoy a competitive advantage in this aspect.
Outsourcing is the way to stay ahead of the curve
Given the changing dynamics of business, companies need to be flexible. The recent pandemic has shown that change is the new normal. As a result, companies need to innovate to be increasingly relevant to their customers.
Outsourcing their staffing solutions could be a game-changer as businesses rebuild and help them scale new levels with minimum disruptions. The cost efficiencies and incredible talent that outsourcing to India brings to the table can help companies focus on growing their business. It can help them reconnect with their customers in a more personalized and efficient way.
With routine tasks no longer taking a significant part of their work time, businesses can focus on other essential aspects such as product development and improving customer service levels. That can be immensely beneficial for their business in the long run.