Business process outsourcing has become an integral part of major organizations in the West. Offshore outsourcing helps in saving money and time and offers various types of back office and front office processing like sales, support, maintenance, content management, troubleshooting and knowledge based outsourcing.

An effective offshore outsourcing center is one that has a complete understanding of the business needs of its client and is representative of the company's mission and vision. It no longer remains an isolated part of the company but grows simultaneously to become just like the client company in its business processing standards and organizational behavior.

Outsourcing processes to countries like India, China, Thailand etc has now become a fundamental component of most US-based organizations and despite the recessionary mode, off shoring is going on as usual. Yet there are certain changing trends that need our focus and attention.

The challenge:

With big players like Accenture, HP, Unisys, and BT scaling up resources dramatically in their own offshoring facilities in Asia; the dimensions in the out sourcing business has changed a lot.
US companies looking to offshore service providers can now consider US outsourcing firms to provide these services through India. This means they get the cost advantage in India, along with the “Indian” talent pool but through US based companies and not Indian outsourcing firms!

This has definitely altered the parameters of the industry. These American outsourcing firms with their huge investment in infrastructure and attractive pay packets have created quite a stir in the Indian outsourcing employment arena and delivery standards.

Combating attrition:

With the already high attrition rate in the outsourcing industry, this has put further pressure on the supply of trained talent, thus raising the cost of attracting and retaining skilled professionals.

Differentiation:

Not only this, Indian outsourcers are now forced to differentiate their services and products and raise the quality bar in order to compete with these US giants.
This has made the industry tighten up its belt, streamline its business process and put utmost importance on the quality derivative. To be able to successfully play the outsourcing game and win in it; it is important to create value through optimization of process efficiency and leveraging new technologies.

Move to second-tier cities:

Apart from the enhancement of the quality of the process, the entry of the US based offshoring firms has made most India outsourcers to move to second-rung cities to get cheap talented employees and retain them.

This strategy has risks due to poor infrastructure and lower quality of talent, which will necessitate investments in training and management.

Low-cost labor locations and chasing low-cost employees is a very cost-intensive way of conducting business which cannot be successful for long.

The trend of globalization is changing the workforce composition of these outsourcing firms and in order to make profits more and more service providers need to hire local employees and train them to international standards. That is the only way to cut costs and yet ensure the quality of the business process.

Some competition from American outsourcers has done a world of good to the Indian outsourcing industry which has begun process enhancement, product differentiation and better delivery schedules to retain their positions in this highly profitable industry!