What Are the Problems With Outsourcing to India?
Today’s Problems With Outsourcing to India
Profitable alternatives to outsourcing outside of India
At one point in time, India was the center for IT outsourcing. The second-most populated country on the planet was a goldmine for development services to easily locate a center and remain profitable among the cheap wages and large population with electronic knowledge. Today, however, many companies have scaled back in the country to look for better alternatives. The escalating wage structure is the most discussed topic, but problems in India go much deeper than the surface issue of wages.
High attrition cuts back on productivity
The decrease in activity in India is a major detraction for outsourcing investors. Back in 2003, Computer Business Review claimed the industry average attrition rate to hover between 30% and 35%, and the problem has only gotten worse over the last ten years. Even established US firms are not safe from the issue, and it’s even worse for smaller firms. Many of these smaller companies are turning their attention to Eastern Europe, where quality workers are plentiful.
Significant IP risk
The laws in India have been lacking a tight structure to protecting customer source codes and often manipulate information and tag these codes as their own. Even with progress being made to improve the issue, Indian court systems do not fall in favor of international companies. An editorial published by Rouse and Co. states, “Unlike China, there are no administrative remedies available in India for enforcement of intellectual property rights.”
While foreign companies often come up empty-handed in the slanted court systems of India, a country like Poland, an up-and-coming area for outsourcing, is part of the European Union and is subject to EU IP law which mirrors those familiar in the US.
A lack of talent
India is not replenishing its workforce and outsourcing companies worldwide are struggling. While attrition has prevented any growth, there are blossoming locations in the world better suited for outsourcing such as Poland. Poland has long held a core on embedded development technology and is increasing activity in users and development awareness with Web 2.0 technology. In comparison, India has long been known to focus strictly on IT. The talent in India is going to cost more for your company and the body of talent in Eastern Europe is equal to its global competitors.
I remain seated in Poland is one of the best investments for your money today. Poland’s development style is extremely similar to that in the US. They are known to think creatively, rigorously testing and questioning results to better the final product. The Indian style of work is very detailed and direction specific; there is very little room for open-ended goals. Sending a project to India with the request for unique results is detrimental to their work habits, making productivity a lot lower than many seem to assume.
As the wages of every Indian worker seems to be rising, it is no wonder that cost weighs heavily on outsourcing costs. The standard increase of pay is 20% every six months. You will be paying a worker 45% more than at the beginning of their hiring date. Eastern Europe and Poland’s engineers are just as malleable as India’s workforce. At the current speed of things in India, I think the country will be exponentially more costly in two years time. Even though the American dollar is not the strongest from a global standpoint, it still does not have the same drastic impact in Poland as is happening in India. By having facilities in Eastern European countries, Teqniksoft has actually decreased the expenditure on developers as our customer base expands and our revenues increase. Many companies in India cannot attest to the same profits.
About Teqniksoft, LLC
Teqniksoft is an international software development company with operations in North America, South America, Europe, and Asia Pacific.
We provide complete product lifecycle solutions for desktop, Web 2.0/Cloud, and mobility applications, and core competency in embedded systems engineering, CPLD and FPGA design and development, integrated circuit and PCB design and development, and building software systems for both Bare-Metal and RTOS environments. We also provide consulting services for all stages of development from architecture through QA, provide component technician services, and we have worked with all of the leading suppliers and manufacturers in the industry.
Our team has architected, designed, developed and delivered commercial products for broad spectrum of clients who range in size from large, public technology companies to early stage start-ups. The solutions cut across industries that range from Rotating Media and Solid State storage systems to viral mobility applications running on iPhone, Android, and many other mobility platforms.