Why is India one of the most preferred destinations for software development worldwide?

Everyone all over the world obsessed with the question in their mind that why is India one of the most preferred destinations for software development? This is truly based on certain factors which are discussed below: 

Software Development commands extreme significance for new IT solutions and IT-enabled services due to the rising global demand. Appropriate software development gives the right amount of thrust to the web sites functionality and service quality. This task requires thousands of skilled professionals who put in hours of research, experimentation, testing and trials. Apart from the rising demand, skilled manpower, technology and infrastructure are essential for Software development and that makes offshore outsourcing an indispensable requirement for the IT Industry.

The developed countries that desire to make rapid strides in the field of IT, finds it difficult to get the right amount of manpower needed. On the other hand, developing countries, especially Asian countries like India and China, have followed an IT policy that resulted in the generation of enormously skilled manpower and a well developed IT infrastructure. This has led to a real boom in outsourcing industry with the destination being India.

India is one of the most preferred destinations for software development worldwide. With its highly skilled and available human resources, use of latest technologies and high–end infrastructure, India is capable of handling any type of software development. The strong point of software development India industry is its capacity to develop more rapidly the required software and provide innovative and customized software development solutions.

Study suggests that 50% - 75% of the Fortune-500 companies have outsourced work to India and the Indian IT outsourcing industry is growing by 25% - 30% on an average annually. Thus, India evidently has a competitive edge and clear-cut advantages over other contending players (destinations) in the Software Development Outsourcing business.

Indian outsourcing destinations like Bangalore, Chennai, Pune, Mumbai, Delhi and Kolkata are developing with lots of investment in the infrastructure in terms of power, road and communications. India also has the expertise of quality certified software firms and outsourcing suppliers that not many countries can boast of. So as of now, India seems to hold its position as the leader in outsourcing service market.  

Some of the factors that make India a potential software outsourcing destination are:

Vast Manpower:

With a population of 1 billion and ever expanding army of highly skilled science and English graduates, India has unmatched potential in the human resources department even exceeding China in this area.

Cost-effective services:

Outsourcing to India helps the companies in saving more than half of their operating costs without compromising on quality as India has a large pool of educated, trained and technically skilled manpower unlike the west, where technical talent is rare.

High-quality services:

India uses the latest in software, technology and infrastructure to provide global customers with high-quality outsourcing solutions. India has also proved it’s technical superiority over other countries that provide outsourcing solutions. India has the largest English-speaking audience after the U.S. which is computer literate as well.

State of the Art Communication Infrastructure:

Indian companies offer plenty of high-speed bandwidth via satellite connectivity, submarine cables and optical fiber networks. Add to this the fact of countrywide mobile telecom coverage and you have 24/7 flawless connectivity with vendors and clients 365 days of a year.

Time Zone Advantages:

The time zone advantages between India and countries in the U.S and U.K has proved to be another important factor why companies outsource to India. Organizations who wish to provide their customer with 24x7x365 days customer support or help desk services can outsource to India.

Rapid Economic Growth in India:

Indian economy has been witnessing a robust growth rate for many years now and the Indian growth story is largely due to the services sector, which accounts for more than 50% of the GDP. This has catapulted India in the position of world's second largest software exporter, a leading IT superpower indeed.

Stable Polity with Clear IT Policies:

India has been witnessing new political maturity with large but stable coalitions that have continued the market-friendly reforms introduced in 1991. The IT and ITeS sectors have been the biggest beneficiary of these policies. The government is also trying to cut down the red tapeism by introducing single window clearances for setting up IT projects and firms. The Indian Parliament has enacted the Information Technology Bill, 2000 recognizing electronic contracts, barring electronic crime, and e-filing of documents. India also has a nodal association of the IT companies called NASSCOM to provide a blue print of the needs and progress path of IT vendors and companies in India.

Attractive Tax and non-tax Incentives for IT Companies:

The Central Government has provided many tax and other incentives to boost investment in the IT outsourcing industry in India. Some of the benefits accruing to IT firms are:

1.  10 year tax holiday for companies involved in construction and/or maintenance/operation of an infrastructure complex.

2.  10 year tax holiday to firm that generate and/or distribute power.

3.   5 year tax holiday to telecom firms providing internet and broadband services.

4.  10 year tax holiday to IT firms setting up venture in notified IT parks and Special Economic Zones (SEZ).

5.   5 year tax holiday for IT and other firms setting up a project in backward districts and states.

6.   IT outsourcing and other firms also get tax incentives on exports as tax is deducted on profit for exporters setting units on SEZ's, Electronic Processing Zones (EPZ), Software Technology Parks (STP).

7.   Attractive tax incentives are available on expenditure for research and development including deduction of 150% on scientific research and 10-year tax holiday for scientific and industrial research R&D companies.

Today, the MNCs have a greater focus on the Indian IT outsourcing and software development market. While a large number of companies are outsourcing their software development to Indian companies, others are establishing a presence in India and participating actively in the software export arena. Thus, India is an ideal offshore destination for software development, programming and IT outsourcing due to a number of factors some of which are categorized above.

Some other factors that truly matters while considering India as a Outsourcing Hub:

Workforce:

The size of India’s workforce is between 430 and 471 mn

Low Budget Tier II Cities:

Cities like nashik, sangli, aurangabad (maharashtra), mangalore, mysore, hubli-dharwad, belgaum,coimbatore, nagpur, kochi, trivandrum, chandigarh, mohali, panchkula, ahmedabad, bhubaneswar, jaipur, visakhapatnam, raipur and lucknow offer a truly sizable lower business process overhead

Government Support To Infrastructure:

The Government of India in partnership with private infrastructure corporations is providing robust infrastructure throughout the nation

Fortune 500 Presence In India:

Almost half the fortune 500 companies have offices in india

Number One Outsourcing Destination:

80% of European and US outsourcing firms ranked India as their number one outsourcing destination

Major Differentiators:

Favorable government policies, fast-developing infrastructure, and an immensely talented work force, are responsible for the Indian IT outsourcing industry continuing to experience a tremendous growth rate of 25–30% per year

Unmatched Vast Pool of Skilled Resources:

The country has a population of over 1.2 billion people and around 3.1 million graduates are added to the workforce each year

Largest English Speaking Country:

India also holds the distinction of being the largest English speaking nation in the world, larger even than the US and UK combined together

Price Flexibility:

A good developer in the U.S. can cost anywhere from $50 to $80 an hour, while a developer in India can be at as low as $15 per hour, and we are talking about full-time, permanent employees here. This pricing flexibility allows companies to manage their budgets and reap large profits

Cutting-edge Infrastructure:

India offers state-of-the-art telecom, ISP, and cellular networks, latest and best in software technology, including customized solutions for various applications such as e-commerce, business process re-engineering, system migration, legacy system maintenance, system integration, and much more. Outsourcing companies also maintain uninterrupted communication channels with clients by providing high-speed bandwidth via satellite connectivity, submarine cables and fiber optic networks

IT – A Top Indian Priority:

IT is regarded as one of the top 5 priority industries in India, and the government has framed policies to obtain maximum benefit from the same. IT industry has support in the form of various tax benefits and the Information Technology Act, which recognizes electronic contracts, bars cyber-crime, and supports e-filing of documents

Favorable Time-Zone Difference:

India provides the quickest time-to-market due to an advantageous time zone difference. The 12-hour time difference between India and the USA provides companies with numerous opportunities for work to be completed earlier than expected, leading to greater efficiency, increased productivity and more time to focus on other crucial tasks. India is an ideal option for 24X7 Customer Support and Helpdesk services

Global Offshore Market Share:

India has 65% of the global offshore BPO market

US Software Export Share:

India is the favorite with 82% of Nasscom

Top CMM Capability:

THREE out of every FOUR SEI-CMM 5 companies worldwide are located in India

Global Reach:

India exports software to over 95 countries

2nd Largest Exporter of Software:

India is the world’s 2nd largest exporter of software, after US

40% of Start-ups in Silicon Valley:

India is the source of management and technical talent for over 40% of new start-ups in Silicon Valley

Number One in ISO 9000 Certification:

India has more software companies with ISO 9000 certification than any other country in the world