IT Outsourcing : a Silver lining ?

 

 

Context :

To Day  /  10 Nov 2020

IT Outsourcing rising as Cost Pressure kicks in   / 

Extract :

Ø  Companies across the world that are hit by Covid and are under pressure to reduce cost are likely to favour outsourcing work to IT services providers in India over insourcing to their captive units in India.

 

Ø  At present there are nearly 1,300 captive centres, or global in-house centres (GICs) in India, and they together employ nearly one-fourth of the 4.3 million workers in the $191-billion IT-Business Process Management sector.

 

Ø  MNCs, over the last three years have either set up new units or expanded their existing ones as they invested more in digital technologies

 

===================================================

3 YEARS ago /  [  Brain Inc 2.0  /  21 Aug 2017 ]

 

Extract :

Now consider this :

 

       >    By employing 5 lakh engineers , India’s “ Tech R&D Firms “ earned $ 22 

             billion . That works to a billing of $  44,000 per man-year of R&D ( Export

             of Services )

             

 

       >    I presume that the “ Manpower Cost “ constitute approx. 50 % of Billing

             Rate ( rest being OVERHEADS and MARGIN )

             

 

 

     >     Hence , Indian R&D firms must be paying an average of $ 22,000 per year to

            its employees ( approx. Rs 1.2   lakh per month )

   

 

 >    As against this , both , Indian as well as American firms pay ( on an average

            ) , $ 88,000 per year to H1 B  visa holders

    

 

    >  With this kind of “ Cost Advantage “ , is there a possibility to do better than

           the projected earnings of $ 40 billion in 2020 ?

 

            

 

===================================================

2 YEARS ago  /  [  Leveraging our Engineering Talent   /   13 Dec 2018 ]

Extract :

 

But , if “ Manufacturing Sector “ and “ Service Sector “ were two horses in the GDP race , I would bet on the “ Service Sector “, especially from the following view-points :

 

Ø    “ Capital Investment per Job created “ would be much lower ( may be 10 % of  Mfg. Sector ? )

 

Ø   Jobs created would be much higher  ( may be 5 times of  Mfg sector ? )

 

Ø  Time ( to create those jobs ) would be much shorter ( months instead of years )

 

Ø   Export of “ Services “ are much easier than export of “ Goods “

 

Ø  Quality of our “ Services “ are comparable – or even better – than from other countries

 

Ø  We will , soon , have the desired quality / quantity of Internet connectivity , all over India

 

Ø  We are turning out thousands of Graduates each year though some need “ Skilling “

 

Ø  Salaries of our Engineers are 20 - 25 % of similar hires in USA – EU – Japan – UK etc

 

===================================================

Dear Shri Ravishankar Prasadji,

 

INDIAN IT BPM INDUSTRY IN FY 19  { Y-O-Y growth }

 

 

#   Revenue…………………… 6.1 %  [  $ 177  billion  ]

 

 

#   Exports…………………….  8.3 %  [  $  136 billion  ]

 

 

#   Domestic Inflow……….  7.9  %  [  Rs 2.9 lakh-crore  ]

 

 

#   Employees………………… 4.3  %  [  4.14  million  ]

 

 

Is there a way we can SALUTE them for this achievement ?

Yes

By letting them loose – giving them a free hand , as suggested in my earlier e-mail :

 

" BACK FACTORY " OF THE WORLD ?....................................[ 09 Sept 2015 ]

 

With regards,

Hemen Parekh  /  hcp@RecruitGuru.com  /  10  Nov  2020