Technical Foundations of ERP Architectures
Information technology is changing at a fast pace. Underlying ERP technology is needed to keep pace with first changing IT scenario and should also be flexible to adopt ever changing business scenario. ERP technical architecture basically defines layout of layers of application deployment between servers and desktops, interfaces and software objects. ERP architecture is no […]
The Economics of Code Sharing Agreements
The airline industry is one of the most competitive industry in the entire world. A large number of incumbents in this industry are making losses. This is primarily because of their lack of efficiency. Since success in the airline industry is solely based on efficiency, many companies have explored unconventional options in order to increase […]
Understanding the China-North Korea Trade Equation
North Korea has always been perceived by the world as a rogue nation. Their aggressiveness became even more apparent when North Korea threatened President Donald Trump and America with a nuclear war. The standoff has led to another round of economic sanctions by the United States. The North Korean dictator has called these sanctions an […]
Reverse Logistics & SCM – Scope and Advantages
Supply Chain Management is concerned not only with the flow of raw materials and finished goods, but scope extends beyond this to include reverse flow of unsold finished goods, parts and packaging materials from the point of consumption at customer’s end back to the organization or to rework/refurbishing vendors. Today reverse logistics has been adopted […]
Inventory Migration – Meaning, its need and importance
The need for Inventory Migration from one warehouse to another warehouse does not come about very often in Supply Chain Operations. However, sometimes the business demands necessitate a change of warehousing location, setting up a new location or even a change of business model. The occasion and need for an inventory migration can come about […]
Gone are the days when outsourcing meant a steady stream of jobs being shipped to India. Now the trend is for Indian companies to create jobs in the West. This phenomenon which is gathering pace in recent times is known as reverse outsourcing or the trend of Indian IT and BPO companies opening offices in the US and Europe to employ locals there.
This reverse outsourcing is estimated to have created nearly 300,000 jobs in the US. This is good news for Indian IT and BPO companies because they are battling the negative perceptions about outsourcing which is seen as a phenomenon that takes away jobs instead of creating them. Especially when one considers the fact that in a presidential election year, the anti-outsourcing rhetoric reaches a fever pitch, so this trend is welcome for the positive news it generates about Indian companies.
Moreover, other aspects like rising wages in India in the IT and BPO sector and the wild fluctuations in the foreign exchange market make Indian companies to contend with expenses that are mounting by the day.
The point here is that though the earnings of the Indian IT and BPO companies are in Dollars, they need to pay their wages in Rupees and hence, they have to absorb the costs of rising wages. So, it makes sense for the Indian companies to open offices and subsidiaries in low wage states like Ohio in the US and in the Czech Republic in Europe where they can benefit from lower costs and at the same time create jobs for locals. This double whammy benefit has indeed raised the image of Indian companies and has given the CEO’s of Western companies something to cheer about especially when they have to appear before committees and commissions made up of politicians to defend outsourcing.
The other aspect here has to do with Western companies preferring to do business with companies near shore or the emerging trend of near shoring. What this means is that many Western companies want to have their back office operations outsourced to locations that are nearer to their headquarters and hence, Indian companies are increasingly opening offices in places like Mexico and Ireland to cater to European clients and US. Though Indian companies have always had a significant proportion of their employees’ onsite, the trend of hiring locals instead of sending Indian employees onsite is picking up.
Finally, the fact that Indian companies have to contend with competition from Philippines and Vietnam has made them realize that they need to offer something more than the usual to grab market share and hence, the latest innovation is reverse outsourcing.
In conclusion, while it is too early to state whether this trend is sustainable in the longer term and whether it can ramp up considerably, the gains from this trend is that it has given an entirely new dimension to the practice of outsourcing and has the potential to be a game changer.
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Effect of Domestic Politics on Business Process Outsourcing (BPO)
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The Drivers of the BPO Phenomenon: Globalization, Economics and Geopolitics
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