Outsourcing and India are synonym to each other. When most of us hear the words “outsourcing” or “offshoring”, the immediate picture that comes to our mind is of Software services and back office operations work done in India for companies in US, UK and other European countries.
By now more than 75% of large American companies have done some amount of outsourcing work in software development or related services to India. So it has now more or less become mainstream.
However, with wages in India on meteoric rise, it is starting to become a problem for most of the Industries other than software.
More than 70% of the engineers take up software as their career due to attractive salaries they get irrespective to the engineering stream they have taken education in !. With this it has become very difficult for Auto, Manufacturing and engineering Industries to recruit and retain good engineers.
The second big threat they are facing is Chinese cheap manufacturing market churning out products at less than half the cost.
So, to retain cost and quality competitiveness, India is now looking at outsourcing big in China. Eleven Indian companies, which were part of a 35-member business delegation to China, have entered into an agreement with Chinese business interest to set up manufacturing facilities and offices there with a total investment of $5 billion.
Indian business conglomerate Videocon Industries Ltd. has signed an MoU to set up $1.5 billion LCD (liquid crystal display) unit in Shenzhen, said a statement by Assocham.
In addition to this, two other telecom equipment-manufacturing companies of ZTE Telecom India Pvt Ltd and Spice Communications Pvt Ltd have also signed MoUs for setting up of telecom manufacturing units also in Shenzhen.
Besides, Maharashtra Industrial Development Corporation, Rajasthan Industries Development Corporation and Unity Power have also struck significant investment deals.