Off Shoring Meaning, Importance, Off Shoring and HRM in India3rd December 2021 1 By indiafreenotes
Offshoring is simply the process of getting work done in another country. You take an activity and move to an offshore location, but that activity is still completely managed within your company, so you control the outcomes.
Offshoring is the process of relocating a business or business process to another country in order to benefit from reduced labour costs or a more beneficial regulatory environment. A range of processes are commonly offshored, including manufacturing, IT, customer service and research & development.
Offshoring is controversial for a number of reasons, including reducing the economic benefits to the home country and the number of jobs available to locals, and potential exploitation concerns over mass employment of cheaper labour in the destination country. Service levels of companies offshoring customer service may also be affected, often due to the culturally-driven mismatch in expectations that can occur.
A related term is re-shoring or backshoring, which means bringing back a business process from an offshore location to the original country of operation.
Offshoring allows you to reduce one of the most expensive parts of your business, the labour costs. Freeing this up will allow you to reinvest funds into your business and give you the opportunity to expand your offerings and service. Essentially working on your business rather than in your business.
Companies can achieve higher productivity by taking advantage of having a different time zone. The decision to offshore effectively allows an organization to have work conducted at all hours of the day and night. It also gives an organization the opportunity to support its customers when they need it and fulfill their ever-changing and on-demand needs. This high degree of customer support may result in a greater customer experience and a more loyal customer base.
Many businesses may not want to relinquish control of part of their operations and production to an external party. Offshoring allows you to have dedicated staff to work for your company only. You provide the direction, train the staff and everything is done the way you want it to, which leads to accountability internal of the business.
To have multiple teams in different countries helps to reduce your risk, provide a greater marketing opportunity and allows you to support your clients when they need it.
Lower labor costs
Offshoring allows businesses to pay less for labor-intensive processes such as manufacturing, round-the-clock customer support, information technology development and coding. Depending on the particular country selected for offshoring, significant savings can come from reduced labor costs.
Access to Staff
This model gives you access to a young and vast pool of talent. In particular to English speaking foreign countries, who are highly skilled and university educated. With the current pressure to find employees with the right skillset in already developed countries, implementing offshore teams will complement the existing staff. The wide skill availability for knowledge-based processes through offshoring becomes an advantage for any business looking to fulfil specific requirements.
Having a different time zone and a workforce ready for 24×7 operation gives you an outstanding opportunity to support your clients when they need it and fulfil their ever-changing needs. This results in a better level of service and a higher level of customer experience with quicker and direct contact to your business. Increasing the competitive edge in your industry.
Lower tax obligations
Countries in which offshored labor is utilized are often looking for ways to incentivize companies to enter into their geography and establish operations and hire local workers as a boon to their local economy. To do so, a lower tax rate for doing business is offered to help offset the costs to a company for setting up those operations.
Off Shoring and HRM in India
Favorable government policies:
Information technology is considered as one among the top industries in India. With the release of “IT acts 2000” bill, India has been rated as an excellent investment potential destination of the world. Through this act, the Indian government has been playing a major role in providing tax-related and other benefits, along with recognizing the electronic contracts, barring cyber crime and supporting the e-filing of documents.
Time zone advantage:
Many of US and Europe companies prefer to implement a follow-the-sun model and leverage the benefits of time zone difference. India, being strategically located in mid longitudes, could unhesitatingly serve both the western world and the eastern world around the clock, 365 days a year. In this way, India could support the businesses in those counterparts, by saving their time, cost and by reducing their time-to-market.
There are various advantages that India could offer for the outsourcer Cost effective services, English language advantage, access to the highly skilled pool of professionals, etc. More than 20 companies in India have attained the CMMI level. 65% of CMMI level 5 companies in the world are located in India alone. India even has the highest level of ISO-9000 software organizations.
Extended support and maintenance:
The Indian offshore software development companies offer complete support, maintenance, and post-launch services once the project is up and running. They help in fixing the bugs and keeping it updated.
English Language Advantage:
Being ruled by Britishers for almost two decades, India has attained a deep-rooted connection with the English language. In the present days, English is spoken, read and understood with ease by most of the Indians. Hence, it enables better communication and understanding between the offshorer and the Indian software developments teams. This facilitates smooth workflow.
Availability of more capital funds:
Offshoring of the software development and technical support to India could reduce the need to invest in non-core business competencies, thereby increasing the availability of capital funds for important core business functions.
Availability of State-of-art technology:
Being aware and keeping up with the cutting edge technology is a need of the day. In case of an in-house team, the companies need to spend time and money on employing the latest technology and training the personnel to get a competitive edge on others. By offshoring the same responsibilities to the best in the field companies, the outsourcer could be assured of receiving efficient services and the latest technological expertise.
Peace of mind and more focus on core competencies:
Offshoring the software development and technical support to the companies that are best in the field could provide peace of mind and let the offshorer focus on the core business activities.
Access to Talented human resource:
An efficient software application development needs financial resources as well as a skilled workforce. Indian outsourcee companies could afford these talented pools of professionals who are well equipped and highly trained for any given project.
Indian outsourcing companies are renowned for having a congruous plan for the project even before they start it. Hence, it is delivered on time as per the planning. The agile process plays a role in the timely delivery of the project.
Indian IT outsourcing companies have gained the reputation to remain in constant communication with the outsourcer. The progress of the project would be regularly updated to the outsourcer through the phone calls or Skype or emails. This would offer the outsourcer as well as outsourcee absolute contentment and peace of mind.
- Regardless of the succession of government coalitions, the focus of Indian government continues to be on liberalizing certain markets which are beneficial to outsourcers.
- Availability of young and highly qualified technical professionals.
- India is a land of almost 400 universities and 1500 research institutes. The country produces 200,000 engineer graduates and 9000 doctoral graduates every year.
- Excellent knowledge and command on the English language.