The Evolution of IT Outsourcing in India: Past, Present and Future

by Sonali Mishra Human Resource Executive

Technology has been one of the fastest growing industries at global stage providing lucrative solutions to every other industry, leading to revolutionary results and changing the face of technological growth charts of many countries. The global businesses are changing, and IT outsourcing has been a huge help. Categorized into two- hardware and software development, IT industry has the largest private sector employers in India. From witnessing a hostile economy to conquering over 67% of the global IT outsourcing market, the industry has come a long way.

India is a leading destination for global companies seeking to outsource their non-core activates such as services, businesses, and high-end processes. But, do you think this would have been so easy like it seems today? Were there any challenges faced by our industry or it was just a piece of cake?

The Beginning of an Era: IT Outsourcing in India in 90s

India witnessed the unfurling of IT opportunities and challenges in 1968. Tata Group was the pioneer of nuclear sector and aviation and initiated its IT establishment in Mumbai. But the industry faced crisis with each step forward, as skilled and intellectual IT professionals immigrated to US and other countries for better IT scope and experience. It was a phase when US immigration laws were relaxed, and Indian wages and payments were not at par compared to other nations. There were several reasons that became obstacles in the foundation of IT outsourcing in India such as shortage of trained and skilled manpower, less young employees with good command over the English language, cut-throat competition, and non-existence of social security laws.

The Year 1991 is known as the early of IT sector as the new economic policy was formulated under the supervision of the then Prime Minister of India Shri Narasimha Rao and finance minister Dr. Manmohan Singh. India led its way to globalization as the liberalization policies diluted the socialist authorizations.

Where Does the Indian IT Outsourcing Stand Today Globally?

India is home to some of the finest IT companies of the world including Tata Consultancy Services (TCS), WIPRO, and International Business Machines Corporation (IBM). Presently, the sector holds over 75% global talent and remarks approximately 67% of the total global outsourcing market.

The progress and achievement data of Indian IT outsourcing is huge and commendable. While challenging its core competencies, the sector has attracted many significant investments from the foremost countries worldwide. According to National Association of Software & Service Companies (NASSCOM), India’s contribution in the global outsourcing market rose to 55% from 51% between 2009 to 2010. Leading global companies are not only looking for cost-effective IT solutions but also for capable staffing solutions, and business process excellence.

Future Trends of IT Outsourcing in India- More human-driven processes will be favoured

The late 2000s economic recession gave a big jolt to the IT outsourcing in India. Experts are now expecting more advantage and thriving trends for the coming years. Outsourcing has always been about cost reduction coupled with quick turn-around. However, the coming years will witness lesser focus on reducing costs. Solely price-oriented process will be eliminated. Instead, the relationship will become more human-driven among outsourced software developers and the clients. The industry will bring system integration for their clients. Risk of the projects will be shared equally by both the ends.

The coming years for IT outsourcing will be more driven towards specialization of manpower and skills. Companies will bid services under a single roof to stand out from the crowd. According to the Statista Report from 2017, India and China will become leading outsourcing countries , thus facing cut-throat competition from the top countries of Central and Eastern Europe.

The age of Automation

The global business process of outsourcing market will grasp around $220 billion by 2020 according to a Global Industry Analytics report. Meanwhile, experts are forecasting that automation will become crucial soon as markets are planning to involve bots and virtual agents to streamline their business projects and growth. On the other hand, cloud computing will increase its demand by 2020 and will impact $1 trillion in IT, as predicted by Gartner.

Conclusion

IT outsourcing has come a long way and 2019 has shown a promising future for businesses and software developers. Considering all above mentioned factors, IT outsourcing boom is inevitable encompassing every sector; employment and GDP will be positively affected for the country unless another recession hits the economy.

References:

IT Outsourcing Evolution

The Evolution of IT Outsourcing in India: Past, Present and Future

Evolution of IT Outsourcing