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.
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
