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Reverse Offshoring from India - Essay Example

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India's information technology (IT) success story goes back to the 1970's when the Indian government decided to block foreign firms operating in the country, thereby paving growth of the domestic IT industry. (Reingold, 2004). The next driver was the Y2K phenomenon which was capitalized by Indian firms to reset software clocks across the globe in the most affordable manner…
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Reverse Offshoring from India
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Download file to see previous pages Outsourcing was a trend which indicated transfer of work which was of low technology and small wages to a company or a nation which provided such benefits. (Frauenheim, (2005). Today increasingly with problems of gaining H1B visas for immigration and need for developing local competencies as well as the flattening of wages in some high end category of jobs Indian IT companies have graduated to the second level of outsourcing, reverse outsourcing. (Reverse outsourcing, 2004). Thus Infosys Technologies and TCS planned to hire over 55,000 workers in 2004-2005. (Reverse outsourcing, 2004). This trend is seen to be mutually beneficial as employees in the West are increasingly absorbed by Indian IT firms. Spokesman for Infosys a leading IT consultancy firm from India confirmed this trend, attributing it to leveraging India's productivity with affordable consulting services in the United States. (Millard, 2004).
Outsourcing as per Harmonize, Hostetler, Middleton (2003) is not a new practice though its conceptual development has perhaps come about after emergence of IT. IT being a core technology area, companies had over the years found it easier to outsource rather than create in house capabilities. This trend was evident in small as well as big companies. (Antonucci, 1998). Leading Indian companies as TCS and Wipro have been major beneficiaries of outsourcing over the years. As Ryans (1996) indicates, the reasons for outsourcing are obvious for businesses reaping benefits of core competence of a company or its staff and avoiding in house accretion of skills as well as manpower.

The trend of reverse outsourcing emerges from the need for cutting costs as well as developing a more balanced business model which can service the customer located at different locations across the globe. This was also one of the primary basis for developing outsourcing as a concept in the initial years. (Garaventa. Tellefsen, 2001). Kelley and Jude (2005) contend that as outsourcing is a part of business the need is to focus on the process of making appropriate decisions rather than the costs of doing so. This is apparently evident in the decision of Indian IT companies adopting reverse outsourcing. The balance of costs versus savings has perhaps led these companies to conduct this highly challenging model of business where they can leverage their core competence.

The emergence of reverse outsourcing as a natural form of growth in business is also evident as per Baldo (2004). Discussing the upcoming competition between China and India, Baldo (2004) contends that as India becomes more proficient in absorption of business outsourcing; the business levels at which this occurs is much bigger, thereby leading to a shift of low end work to other countries as China thus establishing the cycle of reverse outsourcing.

The trend of reverse outsourcing thus implies review and return of work by IT companies in India to US firms or employees with a view to leverage advantages gained from competencies as well as cultural affinities of local population in the home country. Thus having gained huge contracts from international business deals, these companies find it convenient to reverse outsource jobs provided by Western firms to locals thereby enabling greater penetration of the local market. (Reverse, Nd). Gupta (2005), CEO of Inkorus posting on ...Download file to see next pagesRead More
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