The Outsourcing of the Firms Services to India - Term Paper Example

The Outsourcing of the Firms’ Services to India Name Course name Instructor’s name Institution Date of submission 1.0 Introduction The US organizations mostly prefer outsourcing the call centre’s services to India. India is a preferred place for call centers since it offers a large variety of benefits compared to other countries. According to Vagadia (33), India is considered to have a large number of qualified staff members; the country also provides call centers outsourcing services that are cost effective. Outsourcing of call centers may give a company an edge as far as reducing the operational costs is concerned. With respect to outsourcing, the operations of the call center are handled by an offshore organization; the offshore organization uses its own infrastructure and staff members. Internet and the communication technologies have enhanced the outsourcing phenomenon to a global scale. Through outsourcing, the owner of a business reduces the company’s expenses, expansion of capabilities, as well as maximizing their profits. 2.0 The Benefits of Outsourcing Services to India A Large and Educated Workforce The call centers found in India have a large number of qualified and skilled personnel. The employees are literates as well as experienced professionals as far as English is concerned. India has the largest English speaking group after the USA. Dass (1) argues that the large and well educated individuals in India have been a great advantage in relation to other nations. Indian is expected to continue bearing well-educated as well as a large workforce since it comprises of an increasing number of successful training institutes and college graduates. The large manpower of India is willing to work at a less price. In India, the man power is accessible at a fraction of the overseas cost. Unique Call Center Service The call centers in India have a specialized experience in offering outsourcing services. This includes the telemarketing services, the technical help desk services, the CATI services, inbound call services and the email support services. In this regard, the call centers located in India provides a number of IT enabled services. This comprises of accounting services, helpdesk services, the transaction process services, the remote network management as well as the end top end processing. The call centers of India have been found to offer the cost effective call centers outsourcing services. In addition, the cost effective services do not compromise with the quality of their services. The technology of the Indian call centers are of high standards. The Time Zone Advantages A majority of global companies have outsourced the call centers from India. This is due to fact that India has an advantage of time zone. The Indian twelve-hour time enables the global firms to provide their clients with 24hours services. The organizations in the US have are capable of ensuring that their clients acquire around-the-clock customers support by using the Indian time differences (Vagadia, 67). Cost-Effective Call Centers’ Services The call centers in India offers cost effective support services while maintaining their quality of services. The low cost of manpower that is available in India enables the country to offer a high quality call centers outsourcing services on a 24-7-365 day basis at a cost that is fifty percent less than that of the US. This reason has motivated the US firms to outsource the call center to India since they can get quality call centers outsourcing services at a great value for cash. Latest Technology and High End Infrastructure The call centers in India use the modern technology, high end infrastructure as well as the latest software in order to provide excellent and quality customer services. India has furthermore undergone privatization as well as the reduction of internet services tariffs’, telecom and the cellular services. This has been an advantage to India over the other locations as far as infrastructure is concerned. Globally, India has been considered to have a variety of state of arts call centers. The Indian Policies The Indian government supports the outsourcing services and their associated industry. The government allows the duty-free tax exports of the capital goods. Additionally, the Indian government provides a tax exemption on the IT ES exports as well as aiding Indians in the construction of software technology parks that are modern with respect to the telecom facilities and the infrastructure. Confidence and Trust of Global Organization Enjoyed By Indians India is considered as the first country to practice the call center outsourcing services. A majority of organizations have outsourced the call centers to India; they have found India to be a convenient country for providing the outsourcing services. Researches by Kumar and Puranam (75) show that the successful call centers outsourcing project have widely encouraged the US organizations to outsource call centers to India in order to give their companies a competitive advantage. 3.0 The Challenges of Outsourcing Services Although the outsourcing of the firm services to India has enabled firms to lower their costs of operation as well as improving their effectiveness in a number of areas, such as the information technology, outsourcing of services to India experiences a range of challenges. These challenges hinder companies to obtain an optimal efficiency and effectiveness. These challenges include: The Locals’ Strong Accent Indians have a very strong accent; most often, this causes a barrier in communication. A number of words are not pronounced correctly by Individuals of Indian nationality; this leads to misinterpretation of information. A majority of the English native speakers strain to understand the statements provided by Indians. It is evident that the native customers fail to request for the clarification of statements provided by Indian employees working in various call centers. As a result, the native speakers fail to obtain optimal services offered by call centers that are situated in India. This results in poor performance of the US firms. This is because the performance of a firm relies on an excellent communication between the companies and the customers. In this regard, the pronunciation of product names and other services should be clear enough in order to distinguish a certain product from similar products offered in the market. Failure o distinguish these names clearly via communication may have a negate impact on the firms performance (Vagadia, 45). Copy Right and Licensing Problems The outsourced projects by India may be copied as well as sold once again to the organizations competitors. This leads to surviving problems as far as licensing and copy right is concerned. Time Lost in Managing a Project The financial gains need to be weighed against the time required to manage the project across the world. This entails the communication to the customers as well as translating the required details to the Indian programmers. The payment of airfares, visas and accommodation are supposed to be factored in. Risking the Confidential and Personal Data The world may be considered as a global village but the laws that are meant to protect privacy as well as the personal information are locally based. Once the data is outsourced, the US companies have little control over the data. The organization tends to risk its private information regarding its activities. Increasing the Long Term Costs The cost advantage of India is currently at 1:3; this would disappear by the year 2015. This is due to the fact that the Indian wages are rising at a rate of 15% yearly (Kumar and Phanish, 115). The organizations that are outsourcing services to India are required to budget for the long term increased cost. In addition, they need to provide enough time in order to manage their projects appropriately and budgeting for the risks associated with outsourcing. Poor Working Standards The Indian call centers have poor working standards that result from poor communication as well as the cultural differences. They as well experience financial loses that is brought about by the competitors who have better systems. Political Instability India has been experiencing political instabilities compared to other countries such as Australia. Assassinations and street unrests are likely to lead to the collapse of business for many days. Lack of Quality Control The outsourcing of projects needs adequate trust since the quality of programming differs. Most problems normally surface at a later stage. In this case, Oshri (75) believes that projects must be formulated well in order to avoid extra expenses. Patch after patch is used to the fix the programming. Fraud and Economic Insecurity The 1billion dollar fraud that occurred to the Indian fourth-largest software-providers shows that it is difficult to judge organizational economic viability as well as the ability to provide the long term support by assessing the balanced sheet. National Insecurity Henley (112) provides that entrusting the critical systems such as banking and other systems in a foreign nation is a thing of the past. However, recently, the private organizations that has government data as well as banks have been outsourcing the systems as well as the data to the foreign nations for the purpose of getting profit. The information which is confidential is shipped overseas regardless of what happens if the Indian nation declares Australia as a threat. The call centers should remain in the US since it will enhance privacy and confidentiality of their information. 4.0 The Success of Outsourcing Services in the Light of the Strong Local Accents Dass (17) shows that the calling centers would be successful in the US since the native speakers understand both the formal and informal communication. As regards the informal communication, the native speakers in the US stands a high chance to understand the native slung which is uncommon in India and other countries. This may help to improve the communication between the locals at the firm since it is imperative for the success of any firm at the regional level. Additionally, the understanding of the formal communication may help a firm to access international customers effectively. Besides the advantages of formal and informal communication, the American accent is more popular at the global level in relation to the Indian accent. As a result, the native speaking countries such as the UK, Australia, Canada and New Zealand can form a large market for the US products; this would also extend to other English speaking countries such as India, South Africa and other parts of the world which are familiar with the American accent (Plunkett, 55). The large number of customers is likely to increase the revenue for the US firms. As a result, the US companies would stand a chance to manage the high cost that is associated with the American labor cost. In this regard, it is evident that outsourcing of the America firms’ services to other foreign countries does not result in substantial revenues due to barrier of communication which is majorly associated with the Indian strong accent. 5.0 Conclusion The aspect of outsourcing the American firms’ services remain a contentious issue among scholars and business practitioners. The proponents of the outsourcing services argue that the bottom line of an organization is to reduce the cost of operation as well as attaining effectiveness. In this regard, they propose that outsourcing services to other firms may help to reduce operational costs while enhancing the firms’ operational effectiveness. However, critiques argue that outsourcing services to foreign countries that are characterized by cheap labor and expertise in certain fields does not result in significant revenues and quality services. They claim that outsourcing of services to other countries is associated with various setbacks such as the strong local accent which hinders the firm’s success at the regional area. Despite these arguments, a firm should assess the type of services it requires to outsource to other countries. Services such as the call centers are proving to be ineffective due to diversity of local accents in various regions. Similarly, organizations that outsource accounting services are likely to leak confidential information to the market rivals. This might injure the firm’s success strategy. However, the reduction of costs and maintenance of the firm’s operational effectiveness is paramount to the success of any American firm. In this regard, the American firms should avoid outsourcing services that are vulnerable to the firm’s effectiveness; this includes the outsourcing of call centers services due to strong local accent. Moreover, insensitive areas should be outsourced to reduce operational costs as well as realize efficiency. Work cited Dass, Rajanish. "Feasibility study of setting up Information Technology-enabled Services (ITES) and Business Process Outsourcing (BPO) hubs in the north-eastern states of India: an insight."International Journal of Technology, Policy and Management 9.1 (2009): 1. Print. Henley, John. "Outsourcing the Provision of Software and IT-Enabled Services to India: Emerging Strategies." International Studies of Management and Organization36.4 (2006): 111-131. Print. Kumar, Nirmalya, and Phanish Puranam.India inside: the emerging innovation challenge to the West. Boston, Mass.: Harvard Business Review Press, 2012. Print. Oshri, Ilan. Outsourcing global services: knowledge, innovation and social capital. Houndmills, Basingstoke, Hampshire: Palgrave Macmillan, 2008. Print. Plunkett, Jack W.. Plunkett's InfoTech Industry Almanac 2013 InfoTech Industry Market Research, Statistics, Trends & Leading Companies.. Houston: Plunkett Research, 2013. Print. Vagadia, Bharat. Outsourcing to India - a legal handbook. Berlin: Springer, 2007. Print. Read More