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The benefits of outsourcing CX and IT in India

Posted May 22, 2019 - Updated January 23, 2022
India city skyline with colorful buildings, blue sky and reflections.

English proficiency, a surplus of IT workers and a number of geopolitical factors made India a premier outsourcing destination as early as the 1990s.

But a lot has changed since then. An increasingly globalized economy boosted outsourcing’s popularity and led to its geographic expansion to other locations, which resulted in a downturn in the traditional voice-based space in India. In response, India’s government has liberalized guidelines for voice-based outsourcing providers, removing the distinction between domestic and international units, and permitted interconnectivity between all types of other service providers (OSP).

India boasts several distinct advantages in the outsourcing market, including a growing middle class, peace and political stability, the government’s Digital India initiatives and most notably, its unparalleled young, tech-minded population stemming from one of the best networks of high-tech universities in the world. These factors helped India build a juggernaut of IT and back-office outsourcing services that remains steadfast today.

If you haven’t thought about India as a potential outsourcing destination, here’s why it may be time to reconsider.

Large, highly trained talent pool

India’s talent pool is already among the largest globally, and is still poised for significant growth. Some researchers estimate that India’s labor force will increase by as much as 30% by 2030.

While the country was originally known as a call center destination — and it still handles its fair share of CX outsourcing — India’s strong suit is IT outsourcing (ITO), accounting for about two-thirds of the global market for these services. It also has no shortage of young tech talent, with over three million new graduates from top technical institutions each year. “In terms of its knowledge base, and from a technical standpoint, India is number one. It has the largest population for those skills,” says King White, CEO of global location advisory Site Selection Group.

According to White, other trending areas in India’s outsourcing industry include back office processing in healthcare and financial services, as well as Knowledge Process Outsourcing (KPO) for legal and other highly-skilled specialized work. India is still cost-effective and convenient, White adds.

In addition to affordability, the country’s talent pool is known for its high quality of work. “Surveys have found that the IT work performed by outsourced employees in India is better than work sent to other countries,” says CX expert and futurist Blake Morgan.

Time zone considerations also boost India’s attractiveness. India is 5.5 hours ahead of GMT and 10.5 hours ahead of EST, which means companies can employ contact center agents around the clock and never miss a beat when their business closes for the day. “Their daytime is our nighttime, and they can cover support, development or other tasks during all hours,” says Shep Hyken, a customer service expert and author.

Government programs building India’s tech sector

Outsourcing has been an integral part of India’s economic development for decades. “Because outsourcing is a major source of foreign income for India’s economy, the country works hard to ensure outsourcing firms are using the newest technology and infrastructure and regularly training their employees,” says Morgan.

The Indian government continues to actively foster an environment that supports the outsourcing industry’s continued growth across the country, including providing tax exemptions and duty free exports to businesses. Its efforts also include a program called Digital India that is entirely devoted to providing IT infrastructure and resources to all citizens, with the goal of transforming the country into a knowledge economy.

Though oftentimes focused around large urban centers, outsourcing to India also benefits underserved rural communities, as well as smaller cities such as Noida, near Delhi, says White. “The government has put all this money into setting up large-scale rural call centers. It’s a testament to their vision of trying to help people, not just cluster them together in Mumbai,” White says.

A growing entrepreneurial culture

The Indian entrepreneurial spirit is growing with the establishment of government programs and organizations like 10,000 Startups, which has the goal of creating 10,000 new businesses in the country by 2024. The initiative began in Bengaluru (Bangalore), which has become a center for innovation and technical ability.

In fact, the World Economic Forum recently named Bengaluru the world’s most dynamic city, based on factors including innovation and technology. Moreover, Walmart’s $16-billion acquisition of Flipkart, an Indian e-commerce platform located in the city, represents an exciting milestone for the local start-up scene.

But Bengaluru is not alone. Tech hubs have sprung up across India, and now many are looking to Hyderabad as the most dynamic city. It has attracted significant global investment due to its new and improved infrastructure and the concentration of firms focused on technical services.

Language, culture and stability

Home to an incredibly diverse and vibrant culture, India has long integrated influences from around the world. From tropical jungles to some of the tallest mountains in the world, its geographic diversity mirrors its economic and political diversity. Well-known for having the world’s largest democracy, Morgan says “India also has a stable government, which lessens the risk of unrest disrupting international work.”

With digital transformation gaining momentum as a top business priority for companies around the world, there will be a sustained and growing need for IT talent to build, deliver and support the coveted next-gen services and solutions. Through decades of investment in its people and infrastructure, India is well-positioned to meet and exceed these needs today and well into the future, making the country a great outsourcing location.

Want to get a better feel for TELUS International’s presence in India? Take a virtual site tour and more, here.

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