Outsourcing is as old as the concept of free market and trade itself. Instances of outsourcing have been noted as early as the 18th century in England. Factories were relocated to places offering cheaper labor to cut costs and increase the profit margin.
Another age-old proponent of outsourcing is the publishing industry. Publishing companies have always focused on their core business, which is creating written content.
The actual printing of the book is done elsewhere by printers.
This saves publications the cost of buying a printing press for the sole purpose of publishing their books. It also allows publishers to focus on other vital aspects of publication like promoting their writers.
Outsourcing has a long and established history, however, its form has constantly been evolving. Outsourcing in its contemporary avatar was first envisioned by Morton H. Meyerson 1 in 1967. He proposed a business model that we now call outsourcing.
In the 1990s companies began to outsource to India in accordance with this model.
Outsourcing being a dynamic concept kept evolving and changed over the years. Outsourcing to India has gone beyond data entry and back office work. Although outsourcing in its new avatar is shaped by its history, it is no longer bound to it. We still need to understand the history of this concept to understand its contemporary applications.
History of Outsourcing To India
The modern concept of outsourcing was created due to certain trends within global corporate structures. In the 60’s, big corporations diversified their businesses to hedge the risk to their future.
Within twenty years the corporate structure had grown vast and complex. These MNCs felt like they needed to revise their strategy and started focusing on their core business. The verticals they had developed during the diversification phase were outsourced.
This generally meant the IT departments. So every major IT company began to outsource work to India.
India was a unique location that had a confluence of two skills, computer programming and English proficiency. Outsourcing services to India was also cost-effective. It was easy to hire a large group of engineers to check long lines of code. It was also easier to create a database by hiring a large workforce for data entry.
The skilled workforce in India excelled at the tasks given to them. The profitability of such ventures made offshoring in India a new norm for corporations. The services being offered began to evolve with the success of these early ventures. The scope of outsourcing expanded rapidly in the first decade of the 21st century.
- Case in Point:
Big international banks like the Citi Bank employed Indian IT companies to fix Y2K bugs in their computer systems. The success of the projects led to further collaborations for other services. Indian firms soon handled Citi’s back office processes and their customer services department.
Evolution of Outsourcing To India
Internet speeds began to increase exponentially year-on-year in the early 2000s. Transferring data became simpler as networks became faster. This brought a range of new services under the purview of outsourcing.
Soon financial services, back-office processes and customer service were outsourced to India.
This new phase of outsourcing made Indian resources available to small and medium enterprises across the world. The IT industry work being outsourced also changed. There was more stress on application development and less on database management. The truly skilled jobs that needed creative thinkers were being outsourced to India in the IT industry.
The world witnessed first-hand the capacity of Indian resources to innovate.
Outsourcing had successfully evolved beyond business process outsourcing by 2010.
The demand for resources started undergoing a dramatic change. The global markets were approaching India for its most skilled and trained resources. The Indian workforce proved its mantle on a global stage for completing complicated projects. The opinion on outsourcing underwent a drastic change. Businesses began to consider getting partners for their core business functions while offshore outsourcing to India.
- Case in Point:
Google Adwords is the primary source of revenue creation for Google. The entire project for Google was handled by a third-party IT partner that had numerous offices in India. Thus, from handling tertiary processes, outsourcing companies had grown enough to handle primary business processes.
Outsourcing To India: Outlook Beyond 2023
In this post-pandemic era, outsourcing is being redefined once again. More than service providers, corporations and MSMEs alike are looking for solution providers. The relationship between the company looking for offshore support and those providing this support has changed. More than clients and vendors, these companies come together as partners. Both look forward to growth through a synergic collaboration.
- Case in Point
The new and upcoming platform Fab is an excellent example of such a collaboration. The founder and CEO of fab.com had a simple e-commerce business idea. He wanted to build a platform online for those selling unique products and experiences. He began his journey by looking for a tech co-founder who could work with him. Since could find an adequate partner for his start-up, he decided to partner with an Indian software development company. He outsourced work to India right from the foundation of the company. According to sources the company reported a revenue of $170 million in 20222.
The key takeaway from the example is the extent to which outsourcing can empower new business ideas. Outsourcing can help new entrepreneurs every step of the way. From ideation to production and execution, every step can be made better through outsourcing.
If you have an idea for a new business or to expand your current one, then don’t hesitate to outsource. Every new business idea enters uncharted territories. It helps to have a seasoned partner by your side in such circumstances. Outsourcing services in India have such versatile expertise.
You will find the right resources for your project with these outsourcing companies. Their skilled services will not only give you the quality work you desire but also fit within your start-up’s budget. Outsource to India without any hesitation and find the perfect partner to grow your business with.