Could outsourcing to India be at threat not from anyone else but US itself? And NO, it’s not from Obama this time…
For years India has been the leading outsourcing destination for companies from the US. A number of factors like cheaper labour, lower costs, rising productivity and also the language factor have fuelled a boom in this sector. The recent speeches by Obama against it and also Philippines rise an alternative destination for outsourcing have not caused much of an impact.
But now there’s something bigger happening in the US itself which could put India’s tag as an outsourcing destination in jeopardy.
A number of small IT companies like Saturn Systems, Rural Sourcing, Onshore Technology Services, Cayuse Technologies are among 20 such companies which have sprung up in remote parts of US.
Two important reasons have given way to the growth of these companies: –
- Dissatisfaction with India in terms of service, their poor understanding of the work and also their takeaway of jobs meant for the US
- Challenges with visas issuing
Many of these companies have bagged a large number of corporate clients, built up very detailed and useful software and also started hiring in large numbers.
On an hourly basis they may cost about 10% – 150% more than their rivals overseas. But if one factors all the additional costs such as quality control and oversight, the rates are comparable. The rates they offer are cheaper than the domestic counterparts. They also have the big advantage of understanding the US regulations much better than their offshore counterparts and thus can be easier to handle.
Top Outsourcing Countries for U.S Companies
India has high outsourcing revenue of $50 billion which is expected to triple in size by 2020. In contrast to this, the rural outsourcing market in the US is worth lesser than $100 million. The interest in this has risen over the past couple of years since US has had its worst recession in years and the government is looking at ways of creating jobs. Factors like cost pressures on the economies of India and China may also help in the development of the rural outsourcing industry.
The biggest problem for the development of rural outsourcing in US is finding the right kind of people and also maintaining such a skilled workforce. But as Randy Willis, Cayuse Technologies says –
"The good news is we can supplement with lower-skilled work while we’re growing the deeper skills."
Do you think these rural outsourcers in US can sustain themselves or prove a threat to the Indian outsourcing story?