The importance of manufacturing in India

Manufacturing is one of the top industries in India. Consider this.

According to Manufacturing Today:

Manufacturing has traditionally played a key role in the economic growth and development of countries. In developing countries, the importance of manufacturing has diminished over the last 20-25 years, resulting in de-industrialization. However industrialization — or increases in the share of manufacturing in Gross Domestic Product (GDP) — is a key feature of modern economic growth.

Historically, manufacturing has been the backbone of all developed and developing nations. It is where R&D starts, where new technologies are born, where scientists and engineers and others are challenged to develop new and better processes, products and technologies.

The manufacturing industry has pioneered historic breakthrough improvements via concepts, tools and methodologies over the last century.

1. Frederick Taylor’s “SCIENTIFIC MANAGEMENT” of the early 20th century.

2. Gilberth’s “Motion Study” together known as “TIME AND MOTION STUDY”

3. MASS PRODUCTION SYSTEM of Henry Ford which revolutionized the automobile industry

4. STATISTICAL PROCESS CONTROL pioneered by Walter Shewhart and later by Deming and Juran: it significantly improved process quality during World War (WW) I and II

5. Dr. EDWARD DEMING’S 14 POINTS: helped Japanese industry to rise from the ruins of WW II

6. TOYOTA PRODUCTION SYSTEM (TPS) or “JUST IN TIME PRODUCTION” created by Eiji Toyoda with help from people like Taiichi Ohno and Shigeo Shingo that helped Japan (post WW II) to become the cheapest and most fuel efficient manufacturer of cars

7. TOTAL PRODUCTIVE MAINTENANCE to reduce losses in manufacturing by Tokutaro Suzuki that helped improve performance of chemical industry

8. SIX-SIGMA at Motorola by Bill Smith to improve defects and improve process capability later made famous by Jack Welch at GE

9. THEORY OF CONSTRAINTS (ToC) by Goldratt to improve throughput and reduce operating costs and inventory

10. LEAN by James Womack & Daniel Jones who brought TPS from Japan to the western world

As we know, all these concepts which originated in manufacturing are now used across various industrial sectors like IT, Financial Services, Hospitality, Logistics, Government and Armed Forces. This underlines the contribution and importance of manufacturing to industry as a whole.

India story so far

In last decade India has emerged as one of the fastest growing economies. While revising down the GDP growth outlook for 2020 to 6.1 IMF has pegged the medium term GDP up to 2024 at 7.4% making India one of the fastest growing economies ahead of China at 5.9%. (these estimats are prior to onslaught of Covid-19. The revised estimates are still emerging) Today our service sector contributes to 54.13% while manufacturing sector contributes to 18.32% followed by agriculture which is at 14.39%. Given our large domestic market which needs “products” to consume such a lower contribution of manufacturing is not a healthy sign.

Manufacturing provides many jobs, at all levels. It is important as an employment generator. Among all sectors (service, agriculture, social, manufacturing), manufacturing distributes wealth most equitably among the work-force; hence is a key factor to pull people above the poverty line. E.g. In most of the fast developing Asian countries such as Thailand, Indonesia, Malaysia, Taiwan, Philippines, Korea and China, manufacturing has contributed 30 to 50 per cent of GDP, and thus have helped in eradicating poverty. In contrast, Indian manufacturing sector’s contribution to GDP has moved from 16% to 18.32 % in last 10 years.

“Make in India” initiative is designed to take manufacturing to 25% of GDP. For India to realise these projections our manufacturing industry has to play not just significant but a leading role. Under this initiative GoI has identified and taken many steps to improve competitiveness of Indian manufacturing organizations. This has resulted into India to jump to 58th rank out of 140 countries on the Global Competitiveness Index of the year 2018.

Even before GoI started serious efforts through reforms, organised manufacturing sector in India has put its act together and has spent significant efforts in putting the house in order. While battling with factors beyond their control leading Indian manufacturing companies have taken lot of efforts to reduce manufacturing costs, improve quality, sweating the assets and improve productivity. Most of the leading Indian manufacturing companies have adopted world class manufacturing or manufacturing excellence practices using methodologies like TPM, TQM, Six-Sigma and Lean. Since 2003, India companies have won 401 JIPM TPM awards which are highest for any country outside Japan. Indian companies have won 38 Deming Prizes – the highest global recognition for TQM implementation. India has the most US FDA approved pharma plants outside US.

While that is the story of top of the pyramid manufacturing companies an average manufacturing company in India is yet to adopt world class manufacturing practices and claim to get competitive advantage. Many Indian companies use various manufacturing improvement initiatives. These initiatives are used on stand-alone basis without integration. E.g. initiatives like kaizen, 5 S, Quality Circles and Six-Sigma etc. excel in themselves and remain restricted to lower and middle level. Such programs remain largely cosmetic in nature without creating any competitive advantage. In some multi plant organization each plant is left to decide their individual program with limited or no horizontal deployment of best manufacturing practices. Often there is no integrated approach to initiatives across plants. E.g. while one of the plant might be winning accolades in Quality Circle initiative, other plants of the organization do not have a culture of Quality Circle but may be working on other initiatives. Another typical behavior we often see is that the plant manager would claim to be knowledgeable about manufacturing excellence initiative but there would not be practicing the same.

Today’s Manufacturing plants are not isolated from the end to end supply chain which consists of Plan, Source, Make and Deliver. Hence Manufacturing practices within four walls of manufacturing can’t be built in isolation. There have been many examples of companies spending lot of money on ERP with limited impact on manufacturing performanceas modules like PP and MM are not supported by a strong manufacturing improvement initiative that improves down time, cycle time, change over time, MTBF and MTTR. Objectives of a manufacturing excellence program have to be defined in the context of specific supply chain challenge faced by the company’s supply chain. E.g. a B2B supplier has to build abilities to provide small batch sizes of variety of parts within short lead time as demanded by the customer factory which itself might not be very good at supply chain planning. In such a case the plant has to focus on efficient layout, quick change overs with minimum wastages and delayed differentiation. A pharma plant has to be fully compliant with GMP as defied by regulators. Thus practices like 5S, process capability improvement, SOP management; ability to do exhaustive CAPA and data integrity should be the key objectives of its manufacturing excellence program. In many such cases we don’t see the supply chain objectives being well integrated in manufacturing.

Manufacturing Excellence program to integrate “Panchmahabhoot” of manufacturing

As per Auruveda and Indian philosophy we have five basic elements in nature, which are associated with health of human beings namely Prithvi (Earth), Jal(Water), Vayu(air), Agni (fire) and Akash(Ether). Any disorder in human body indicates imbalance of one or more of these elements. Similarly a manufacturing plant has five basic elements which govern its performance. These elements are Assets, Processes, Place, Utilities and People.

Any lack of performance of a plant can be traced back to sub optimal management of these elements.

A comprehensive manufacturing excellence (ME) program has to ensure that performance of all the five elements is improved to deliver a right quality product at least conversion cost with highest productivity & safety, with optimum inventory at right time. A manufacturing excellence program has to address following basic aspects:

Improving Asset Adequacy and Availability :
Adequacy of asset mean the bottleneck stage of manufacturing has enough capacity to meet the demand hence must be fed with orders which improve throughput. The concept of Theory of Constraints (TOC) has to be used to make this happen. The bottleneck has to be fully exploited by focusing on Overall Equipment Effectiveness (OEE) improvement using TPM, Lean and Six-Sigma tools. Remaining stages of manufacturing have to be adequately available by rigorous implementation of TPM.

When we think of assets in a traditional manner we only focus on production assets. In some process and chemical plants utilities play a major role in deciding capacity which is often is a function of product mix. Thus implementing TPM in utilities to improve quality, availability and adequacy of utilities has to be part of ME initiative. In industries like pharma where large number of SOP based analytical testing happens for RM, PM, FG and WIP QC labs are important assets using various equipment for testing which can become bottlenecks. Hence QC has to be part of the ME program.

Another area to build excellence is building smart assets and IoT based asset management. Ability to build a connected plant where machines can communicate with one another, predict failures and measure their own performance is important for asset management.

Improving Capability, Flexibility and Value of Manufacturing Processes:
A plant uses many processes like capacity management, production planning & scheduling, Asset Maintenance and Quality Management which support the core production process. Improving process capability of these processes to reduce variations, defects, rework and delays has to be the objectives of cross functional and function projects lead by senior and middle level managers. Methodologies like DMAIC, SPC (Six-Sigma tools) need to be used for process improvement. Flexibility of support processes in terms of quick response time and shorter lead time are critical for plant flexibility. A process becomes valuable when it has less non value adding activities and meets customer expectations in terms of time and quality. Manufacturing processes often have lot of wastes which increase the lead time. Use of tools like VSM and 7 Wastes (Lean tools) are very effective in identifying wastes and designing new processes.

Workplace Organization
The workplace is like ether which fills all the space in a plant. Workplace effectiveness fundamentally starts while designing the plant layout. Indian manufacturing has grown through brown field. Most of the old plants have poor layouts leading to problems like unwanted material handling, inadequate machine working area, poor illumination & ventilation and safety problems. Ensuring high quality workplace upkeep, hygiene and safety are quite a challenge. While we have focused on cleanliness with some success we have not understood importance of beautification of manufacturing shop floor. Why should a shop floor look drab and mundane ? How can we use the machines, walls, MH equipment, floor etc to display messages about quality, safety, team work, inventory etc in a manner which will make shop floor lively and vibrant ? why cant there be some plants in the shop floor ? Of course all this has to be done keeping applicable safety and environmental norms.

Thus a robust 5 S and beautification program coupled with strong intolerance towards “abnormalities” should be the foundation of any ME initiative. It has to go hand in hand with initiatives like autonomous maintenance (AM). Making AM and 5 S as part of job description of a shop floor worker, however highly skilled a job may be is critical much needed mind-set change.

People Capability & Total Employee Involvement
Involvement of grass root level is the foundation of any improvement initiative. A robust mass awareness and communication program which makes the masses aware of the business challenges and new improvement initiatives has to run on an ongoing basis. It gives opportunity to the leaders to connect with the masses and gives employees to see how their role needs to change with changing time. Programs like 5S, Kaizen, suggestion scheme, Quality Circle etc have to be effectively used to achieve shop floor improvement objectives which get cascaded from the organizational thrust areas. Today customer wants full visibility and access to shop floor. The experienced customer or auditor of international regulatory body assesses the work culture during such visits by interacting directly with shop supervisors and workmen and nothing remains hidden. Thus we have to move from employee involvement to employee engagement. Creation of empowered cross functional Area Effectiveness Teams in each section right from entry gate to scrap yard & ETP is needed to improve workplace organization and employee engagement.

Upgrading skills is a continuous process as the manufacturing technology is changing fast. Knowledge of basic 7 QC tools, Why-Why analysis etc are no more new skills. These are basic skills to remain gainfully employed in today’s manufacturing world. In India most of front line staff lack adequate supervisory skills which hamper their ability to do effective daily management.

Plant managers have to build capabilities to understand latest applicable manufacturing technology, have to be literate in IoT and digital technologies. Sadly today’s average Indian manufacturing manager is quite inadequate even in excel skills. They need to practice high level problem solving skills using statistical analysis to solve complex problems, process reengineering skills and appreciation of supply chain view. Managing industrial relations in situation when the workforce is going to shrink with use of automation and robotics is important.

Each company has to design its own unique program aimed at building competitive advantage through manufacturing. A large multi plant manufacturing organization has to develop following core abilities under the umbrella of Manufacturing Excellence. These abilities have to be part of company’s manufacturing DNA:

1. Common maturity model to measure maturity of MfgEx across all the plants
2. Comprehensive improvement structure across all plants
3. Common Operational KPIs across the plants
4. Strong internal capabilities to continuously improve product quality, throughput and costs.
5. A robust linkage of improvement targets , performance & maturity of ME with and rewards of leaders
6. Ability to rapidly implement best manufacturing practices and key corrective actions for critical issues from one plant to all the plants.
7. Integrated planning to manage delivery due dates & inventory
8. Availability of a competent pool of manufacturing leaders who understand Manufacturing Excellence
9. Strong structure for manufacturing capability building lead by internal trainers
10. Robust mechanism to ensure implementation of MfgEx at key vendors and 3P plants.

Manufacturing Excellence is a long term commitment and core competency for manufacturing leaders. Make in India will be truly successful only if we are able to build culture of Manufacturing Excellence across majority of the plants. This task is quite daunting and would call for much more collaboration among manufacturing companies facilitated by industry and trade associations. Some kind of mandating and incentivizing from the government would help in gathering speed as we are already late.

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The 4 best reasons why India is the global hub for outsourcing business

India is becoming one of the largest outsourcing centers in the world. Here's why.

According to LinkedIn:

Introduction:
India is becoming the world's largest outsourcing center. In today's world, the only way to reduce overhead and increase profits is to outsource. In the global market, all multinational corporations and other large corporations want to reduce their variable & fixed overheads, which has a huge impact on their profits. In terms of outsourcing, India is steadily marching toward global dominance.

Which industries are outsourcing to India?
India establishes itself as a global outsourcing leader in all industries. India establishes itself as an outsourcing hub by creating a great platform for other countries to access and by making foreign policies more fluid. In India, the IT sector and BPO/call centers are at the forefront of outsourcing, with the accounting and finance industries also playing a significant role.

1. IT Sector
2. Call Centers
3. Accounting and finance
4. Manufacturing
5. Production

Why outsource to a country like India?
The primary reason and motivation for businesses to outsource their operations are to reduce payroll costs and other overheads. India is having less payroll rate in comparison to other countries such as Australia, Canada, the United States, and England. They obtain skilled and talented labor at a very low cost, which is the primary reason for outsourcing to India.

Why only outsource to India?
India, like the Philippines, has been a lucrative outsourcing destination for hundreds of companies, including Silicon Valley powerhouses such as Google.

1. Highly Qualified and Skilled Manpower: When compared to other countries, India has the largest workforce. On the other hand, the more highly skilled labor you bring in, the higher your payroll costs. So, to avoid rising payroll costs while lowering other expenses, India is the best place to outsource your work.

2. Capacitive corporate environment: India is well-known for its high ritual culture and for treating customers well. In comparison to the other preferred outsourcing countries, India has the most flexible work environment. The less disruptive and more work-friendly environment will provide a development model for multinational corporations.

3. Time zone variations: The biggest advantage of outsourcing is time savings. Due to time zone differences, work is completed at night, resulting in increased efficiency.

4. Language barrier: Outsourcing problems typically arise when there is a lack of understanding due to a language barrier. However, because English is the medium of instruction in most higher education institutions, many Indians speak fluent or native-level English. This way, you won't have any trouble communicating job requirements with Indian employees. The Indian workforce is ideal for your customer support services because they'll have no trouble conversing with end-users and addressing their concerns.

Conclusion:
Many multinational corporations outsource their work to India so that they can focus on their core competencies and make critical decisions that will help the company grow.

Original Source


WHY OUTSOURCING TO INDIA CONSIDERED A GOOD OPTION?

Have you ever considered outsourcing your manufacturing to India? Here are some reasons why it is a good option.

According to Tatva Soft:

Businesses are completely wrapped under the thought of reinventing their business effectively with more intelligent operations and streamlined business processes. For this, they have found an interesting and smart way of doing it i.e- Outsourcing. India has been their most preferred destination for software outsourcing or any other type of outsourcing services.

Most technology giants like Google, Microsoft, and Apple are scaling their businesses by outsourcing their secondary services to Indian outsourcing businesses. And the responses are overwhelming because the outcomes are progressive and surpass the expectations.

The reason for considering India as their preferred outsourcing destination is because of many reasons. The first and foremost is cost-effectiveness, efficiency, a talented powerhouse of resources, and proven results make India one of the top outsourcing destinations. So, if you are a business impressed with the superior results surfacing on the web, then it’s time for you to have a reality check. Let’s deep-dive into the strengths and weaknesses of Outsourcing through this blog. To start with putting some limelight on the universally accepted definition of Outsourcing.

1. What is Outsourcing?
Outsourcing refers to the practice of contracting out services or job activities to a third party. An outsourcing endeavor with a technology provider in information technology can include a wide range of functions, from the complete IT function to discrete, readily defined components like disaster recovery, network services, software development, or quality assurance testing.

Enterprises have an option of outsourcing IT services either inside their own country-onshore, or to another country in the same time zone which is called nearshore outsourcing, or to another country that is a more far away country which is called offshore. Cost-cutting has long been a goal of nearshore and offshore outsourcing.

There are many new-edge technologies whose services can be harnessed under the hood of outsourcing services, So, here we are going to see all types of latest outsourcing services that have successful outcomes in the market.

2. Most Common Outsourced Services in India
According to clutch Small Business Outsourcing Statistics Businesses most commonly outsource more technical tasks, including their accounting (37%), IT services (37%), and digital marketing (34%) responsibilities.

2.1 Mobile App Development
Here is what a Quora professional Max Titov has to say about Why one should outsource Mobile app development.

Nowadays, one of the most popular reasons for outsourcing Mobile app development is because the world is drowning in smartphones and smart apps. Every minute there is a new innovation that keeps you in a dilemma whether to use this current one or move ahead with the latest one. Your innovative and unique mobile app idea can be accomplished using an outsourcing app development company with all of the necessary features and functionalities that make it a success. Whether you need native app development or cross-platform app development, you can get it done quickly and easily by outsourcing service providers.

2.2 Software Development
As previously said, India is a global leader in the IT outsourcing industry. Multinational corporations can fill talent gaps by outsourcing software development, app development, and web development to India. Software development outsourcing has become a popular trend when it comes with multiple unpredictable benefits apart from getting access to top-notch professionals. Outsourcing software development is a resolution to cut down on operational costs in favor of your company’s development process. Apart from receiving greater profits, engaging in software development outsourcing brings more professional experience too for the company. You can also accomplish the time of finished projects with efficiency in tasks and execution too. And the best of all is to tap into a large pool of IT expertise.

2.3 Digital Marketing
The ever-expanding scope of Digital marketing is the reason why most businesses are outsourcing Digital Marketing. Being present in the digital ecosystem isn’t sufficient for any brand. They need to establish a presence, become visible online, and make a lasting impact on their users. This is why internet marketing is so important. Outsourcing digital marketing services can help you develop your online presence and raise online exposure in order to generate higher sales. Similarly, SEO outsourcing- an integral part of Digital marketing has gained a lot of focus and popularity in recent years. This has allowed businesses to avoid difficulties while saving a lot of money.

2.4 Information Technology (IT)
In software outsourcing, IT outsourcing is very common. You can also call them IT outsourcing. With the increasing need for software technology and digital platforms, it is very important to stay ahead of the competition in the corporate sector by making the right use of Outsourcing services. IT outsourcing can considerably assist firms in gaining a competitive advantage. IT services necessitate specific knowledge as well as the right tools and technology. As a result, there is an inherent requirement to train personnel and establish the necessary infrastructure. This procedure can be both costly and time-consuming.

Enlisted here are some of the essential IT support services required by any industry such as

Technical Support, Software Development, Website Development, and Mobile App Development.

Several organizations prefer to outsource to India and the reason behind it is that the Indian software sector has competent software engineers and already has the requisite infrastructure in place.

2.5 Knowledge Process Outsourcing (KPO)
Another popular term that made Indian outsourcing more popular was the successful outsourcing benefits of KPO companies. Yes, during the initial years, the KPO industry boomed with the integration of outsourcing in it. Basically, KPO entails the outsourcing of fundamental, information-related corporate functions.

The following are some of the most important tasks that necessitate information processing:

Financial and Investment Research
Research and Development
Data Analysis and Interpretation
To do these high-level duties, one must first grasp the nature of business and the underlying technology. It also necessitates the processing of massive amounts of data. As a result, it necessitates a workforce with advanced degrees and competence in specific fields. This necessitates a significant investment of resources, time, and effort. In such a case, it is more practical for enterprises to outsource.

2.6 Customer Support Services
The last but not the least common industry of outsourcing services is Customer support services. Whether you own an e-commerce site or a software development firm, you must answer your customers’ demands and concerns. However, handling a large number of client calls and responding to their emails can be time-consuming and exhausting.

You can engage call centers to attend to your client’s demands because it is not a particularly technical duty. They will have all of the committed employees and technology required to provide round-the-clock service. This frees you up to focus on important business activities that require the involvement of your employees.

3. Pros Of Outsourcing
One of the most pivotal reasons why businesses consider outsourcing is because of the advantages it offers to enterprises. Outsourcing is becoming more common in the commercial world whose demand has skyrocketed. Consider it a basic process, an operation in which tasks normally performed by your workers are performed by someone else outside the organization. Largely, there are many benefits that outsourcing offers, and here are some of the major benefits.

3.1 Large Talent Pool
This becomes one of the popular reasons why businesses want to outsource to Indian service providers is the availability of a vast pool of skilled professionals. The scarce resource pool has never been there in India. Every year, India’s various colleges and institutions produce a large number of qualified professionals. Most of them are well-versed in world-class business methods and cutting-edge technology, allowing them to complete their responsibilities efficiently.

This ensures that Indian outsourcing companies have access to the necessary skill sets to continuously deliver high-quality work. The professionals in India work as per the client company’s geographic timings and offer help 24*7. USA, Canada, and Australia are some of the major countries benefiting from the time difference and these talented pools of resources.

3.2 Cost Savings
One of the biggest perks of contracting Outsourcing services to Indian companies is that it boosts your bottom line. It is like when you have fewer expenses to pay along your value chain, the total cost of goods or services offered can be lower. This technique boosts your brand’s customer competitiveness. The cost of labor is one of the most significant expenses a company incurs each year. Payroll costs can account for more than 40% of a company’s total budget in some cases. By choosing to outsource, you get access to a global pool of professionals whose financial standards of living may differ greatly. An IT expert in the United States, for example, makes roughly five times the wage of an entry-level IT worker in the Indian outsourcing industry.

3.3 Well-Developed Infrastructure and Technology
Infrastructural investments are one of the smartest investments that companies should make. In short, If you are a business whose revenue is based on varying projects and their demands. Then you must not invest in infrastructure for your business. One of the largest benefits of outsourcing is that you can scalably use infrastructure without spending millions on it.

Instead of partnering with a software development company, this may help your business to not just save on cost but also face other issues efficiently too. You will no longer have to overcome causes of delays, or occurring slew because of issues. Everything will be managed by a third-party outsourcing partner. There are numerous IT outsourcing companies in India that can assist you with your outsourcing needs. Even startups and SMEs in India are now utilizing innovative technology tools to create exceptional web solutions. Even when investments are made, the gap can still be too high. The reason for this is that power capacity is being stretched as a result of international connectivity. So, you as a business will not have to suffer anything.

3.4 English Proficiency
If we go by the statistics, then India’s English-speaking ratio will radically increase. There are over 300 million English-speaking people, and it is anticipated to have over 2 billion English-speaking people by 2050. This surely qualifies the language barrier as one of the fallacies surrounding outsourcing to India.

Also, compared to other countries, the ratio of English speakers compared to native speakers is more. Hence, businesses no longer have to seek an English-speaking country that charges more than India does.

4. How to Find a Good Outsourcing Company in India?

The process of hiring the right outsourcing company demands your business to do research. But, now that many businesses have already adopted outsourcing for their businesses, this process has become easier than before. This means you can easily go by client testimonials or get to see the actual project built or through similar other ways the outsourcing compass services can be testified.

There are major four steps to be followed to see if the chosen company is apt or not?

4.1 Define Your Project Requirements
Before you even start looking for the ideal IT outsourcing partner, sketch down a rough notion of where you want to go. You’ll have a clear direction to pursue as well as a better understanding of the type of partner you need if you define your goals and have a decent idea of your project requirements. You’ll know whether you require a partner or if an advisor or assistance will suffice.

4.2 Check For Proven Track Records
The second thing to bear in mind is to maintain track of the company’s growth statistics. Analyze the company over the last few years to see how they’ve done and in which they are going. Learn about the kind of customers to whom they have provided software development services, as well as the number of projects completed.

4.3 Online Marketplaces
When you are looking for offshore outsourcing partners, some of the most obvious sources can deliver the best possible results. There are numerous readily available internet markets that make offshore IT outsourcing more accessible and manageable. These online marketplaces expose organizations to hundreds of vendors located all over the world in order to give the most relevant matchmaking and optimal outcomes for fundamental project management requirements. You can search by talents, region, category, services, and reviews.

4.4 Protect Your Data and Intellectual Property
Signing an NDA is a sure-shot solution for businesses to protect and safeguard the company data. With this, you can ensure that both parties can seal the information under this agreement. Your trade secrets, intellectual property rights, code details, and several other details are easily concealed under the NDA.

5. Key Takeaways
Finally, we have understood that as technology evolves, businesses also wish to remain competitive in this dynamic global market. You cannot afford to overlook the benefits of outsourcing and neither can ignore the cons. A leading software outsourcing company can assist you to gain a competitive advantage over competitors if you are seeking help or services from an Indian outsourcing firm. The Indian outsourcing market has companies offering comprehensive and superior offshore services with qualified professionals who are brighter and smarter performers.

Original Source


The Complete Guide on Outsourcing to India (Pros, Cons, How-To)

Most companies have now outsourced work to India to save costs and scale their business activities.

From giants like Microsoft, Google and IBM to early stage startups… everyone’s doing it!

Are you also thinking of outsourcing to India?

With India’s efficiency and expertise in handling outsourced work, you could be looking at increased profits in no time.

In this article, we’ll cover everything you need to know about outsourcing to India and how to manage your outsourced staff.

What Is Outsourcing?
Outsourcing is an activity where a company hires a third-party to handle its non-core tasks. This includes tasks that don’t have to be performed in-house, like customer support, data entry and more.

Why do companies do this?
Instead of doing the work themselves, they hire third-party service providers to do it for them. This way, they can focus on core activities that are essential to growing their business.

Additionally, as most outsourcing service providers are based in countries where labor is more affordable, companies can benefit from reduced costs too!

Who are these service providers?
Typically, service providers are companies who have dedicated staff to perform the task. For example, you can outsource your software needs to IT companies.

However, with the rise of the gig economy, you can also outsource to freelancers or independent contractors.

Read more: The Complete Guide on Outsourcing to India (Pros, Cons, How-To)


In-House Production vs Outsourcing: Pros & Cons

Over 50% of all companies worldwide hire third-party teams to connect with customers. It is also expected that the global IT outsourcing market will grow by $98 million from 2020 to 2024. However, outsourced solutions have their own advantages and disadvantages for companies across all industries. Just like the classic, in-house production has its benefits and downsides.

Your choice between the two depends on a wide range of factors. In this article, we decided to unpack the fundamental principles of each method and help you choose the one that fits you best.

Which camp are you in?

In-House Production
Classic production or in-house production is an activity that is conducted within the same business. You are able to perform the task using the time and effort of your own employees and any other assets that the company already has.

In-House Production – Advantages
Better communication
Basically, the whole team works ‘under one roof’ and it is easier for the members to maintain strong communication, especially when a project involves several stages. For example, if you have a question, you can always ask your colleague and receive an answer straight away.

This makes the whole process of communication not only faster but also more effective. Of course, this point has become less valuable in 2020 and WFH. Still, the in-house team members know each other’s work schedules and are familiar with the project’s fundamentals which saves valuable time for work.

It’s easier to control the quality of the product
With an in-house production team, it is easier to keep an eye on the quality of the product. The tasks conducted by every member of the team can be assessed and calibrated on-spot. Moreover, it is more convenient to ensure that everyone is meeting the deadlines and that the planned workflow is running smoothly.

In-house hires are less of a flight risk
Ideally, a person would like to find a job that he or she enjoys and devote quite a few years (or even decades) to this company. According to the Harvard Business Review, employees like the feeling of stability at work, and the fact that they have health insurance, paid vacation days, and other perks helps as well. Some employees are ready to work towards promotion and more benefits. That’s why the chances of someone suddenly leaving the team are relatively small.

Read more: In-House Production vs Outsourcing: Pros & Cons


The Rise of India as a Manufacturing Hub

A couple of decades ago, India was considered to be a third world country with limited economic potential. When the idea of outsourcing first came up, most executives in the United States thought that Central American nations or Ireland would prove to be a better fit. However, two decades later, India is the ultimate destination for outsourcing software services as well as knowledge processes.

After having achieved dominance in the service sector, India is now looking towards becoming a global manufacturing hub. This intention has been made clear by the “Make in India” initiative that has been launched by Prime Minister Modi. As a part of this initiative, special concessions have been announced for multinational companies to create manufacturing bases in India. This has definitely drawn the attention of many American companies that are looking to reduce the dependence of their supply chain on China. It would be inappropriate to say that within a short span of time India will compete with the likes of Japan, Germany, and China. However, the process for transforming the manufacturing sector has already begun.

In this article, we will have a closer look at the reason why India is poised to grow into a manufacturing hub as well some of the problems that it is likely to face during the journey.

Why Multinational Corporations Want to Relocate Manufacturing Operations in India?
Large Consumer Market: India is home to over 1.25 billion people. These people have started to become affluent in recent years. Hence, there is an increasing demand for several products sold by foreign companies. Companies like Abbott pharmaceuticals have seen India become their third largest market in the world! This is also the case with other companies like Cummins Engineering which has seen a 15% growth in its operations for the past ten years that it has been in the nation. As disposable income grows, many multinationals want to sell their products to the Indian consumer. The most cost-effective way to do so is to start manufacturing in India. As a result, it is likely that the increased consumption will drive the growth of manufacturing operations in India.
Politically Stable: Manufacturing facilities are huge and extremely cost intensive. Companies can shut down their offices and move to other locations overnight without causing too much financial distress. However, this is not the case with manufacturing facilities. The amount of money required to build such facilities is huge. Also, the gestation period to recover the investment is quite large.
Companies would not want to build their facilities unless they are absolutely sure that their investment is secure. India has the upper hand on its rivals when it comes to security and stability. India is the most politically secure nation in the vicinity. Pakistan and Bangladesh are facing a problem with terrorism. On the other hand, China is known for being an oppressive regime. India is the most convenient option for corporations to invest their money in.

Regional Export Hub: India has negotiated several trade agreements. As a result, it enjoys favorable deals from all its small neighbors as well as South East Asian countries. Hence, if a multinational company sets up it's manufacturing in Mumbai, it can also serve other markets like Nepal, Bhutan, Bangladesh, Myanmar, Thailand, Malaysia and Indonesia, etc. At the present moment, some car manufacturing companies are even serving the European markets from their manufacturing facilities on the west coast of India.

Read more: The Rise of India as a Manufacturing Hub


Doing Business in India: Advantages & Disadvantages

As a fast-growing nation that also ranks as the world's largest democracy, India is an intriguing market for overseas businesses and investors. In recent years, the country — which has a population of more than a billion — has seen a surge in economic growth and now ranks as the world’s fifth-largest economy by GDP. Indeed, India’s GDP growth is the highest in the world in the past decade, regularly achieving annual growth rates of between 6-7%.

However, very real challenges remain for those seeking to do business in the country.

In order to successfully navigate these challenges, it's essential to plan strategically, perform due diligence, and exhibit patience and commitment to the process.

Advantages and benefits of doing business in India
Stable economy
India’s economic growth has been exceptional in recent years. Buoyed by a robust democracy, key structural reforms, private consumption, and a rise in government investment, India has achieved a high macroeconomic stability ranking (with a score of 90 out of 100 and ranked 41 out of 141 economies) in the World Economic Forum’s (WEF) Global Competitiveness Index.

Business reforms
In a bid to attract foreign investment, the Indian government has eased foreign direct investment (FDI) restrictions, such as raising foreign equity caps for insurance and defense, leading to significant progress in terms of improving its overall business environment. As a result, the country has jumped 14 places to 63rd position on the World Bank's Doing Business 2020 study. New business reforms have also earned India a place among the world’s top ten improvers for the third consecutive year according to the same study.

Junaid Ahmad, World Bank Country Director in India, praised this achievement: “India’s impressive progression in the Doing Business rankings over the past few years is a tremendous achievement, especially for an economy that is as large and complex as India’s. Special focus given by the top leadership of the country, and the persistent efforts made to drive the business reforms agenda, not only at the central level but also at the state level, helped India make significant improvements.”

Read more: Doing Business in India: Advantages & Disadvantages


Everything You Need To Know About Outsourcing To India

India has emerged as the favorite outsourcing destination for companies planning to shift their business processes outside. There can be many advantages of outsourcing to India, cost benefits and vast IT talent pool are just two! However, you need to be completely informed before outsourcing to India and this write-up covers everything you might want to know.

There was a recent survey stating that 80% of firms in Europe and the US choose India over any other country for their outsourcing requirement. Another report by Korn Ferry study states that India will have 1 million surplus skilled tech workers and will become the technology leader by 2030. This will be in a time when the majority of the companies would be facing the challenge of talent crunch.

Although other countries like China, the Philippines, Ireland, Ukraine, and Mexico are giving tough competition to India, the country remains to be the most preferred outsourcing destination. If you are also planning to outsource software development to India or have been outsourcing to the country for some time, here is a complete guide covering everything you need to know about outsourcing to India.

What Is Outsourcing?
There are several questions that you might have in mind when we talk about outsourcing to India. However, for beginners, the first question would be to know the true meaning of outsourcing.

Read more: Everything You Need To Know About Outsourcing To India


Pros and Cons of Outsourcing to India

India is the leading outsourcing destination across the world going by the numbers. India has approximately 55% of the market share valued at US$ 200-250 billion in 2019-2020 and accounted for 8% of GDP in 2020.

As outsourcing in India is very mature, businesses are confident to use outsourcing companies based there for core functions or highly specialised roles like data science and engineering services as well as traditional non-core tasks like data entry, customer service support and administration.

For India though, they are in particularly strong demand in the field of IT outsourcing. India's IT and business services industry is anticipated to grow to $19.93 billion US dollars by 2025 and IT spending in India is expected to be close to $100 billion US dollars in 2022.

Why do businesses use outsourcing?

Let's take a step back and look at why businesses use outsourcing in the first place.

Outsourcing allows businesses to concentrate on the activities that are critical to the success of their company and not get bogged down in repetitive or mundane tasks. It can free up talented onshore staff in a business's home country to work on higher-value tasks that add much more value.

Furthermore, because most outsourcing service providers are headquartered in countries with lower labour costs, businesses can also save money.

Read more: Pros and Cons of Outsourcing to India


Offshoring to India: Top Trends, Companies, Pros, Cons

India has become one of the most sought-after offshoring destinations in the world, even outranking some countries in Latin America and Eastern Europe.

For some companies, offshoring to India is a strategic necessity for cost savings. For others, it is a ticket to expand their overseas operations.

In this article, we will explore why offshoring to India is increasingly popular and highlight five major companies engaged in the practice. We will also discuss the major advantages and challenges of offshoring to India.

What is Offshoring to India?
Offshoring to India is when a foreign company moves its business operations to India, usually to benefit from cost savings. For example, if you run a firm based out of Germany or the United States, you could shift some of your business processes to India.

Most companies move their operations to India to benefit from the country’s lower cost of living, skilled talent pool, and favorable government policies. (More on this later.)

Now, you can take two approaches when offshoring to India:

Hire an external service provider in India to perform your tasks or projects. This is known as offshore outsourcing.
Set up a company in India and hire your own in-house team to manage operations.

Read more: Offshoring to India: Top Trends, Companies, Pros, Cons