The vast majority of businesses from the USA and Europe outsource to India and China. China is the #1 outsourcing destination for the manufacturing sector, while India is the leading country in back-office support and customer support services. The American and European businesses can take advantage of the substantial savings due to drastically lower labor costs in India and a big amount of English-speaking manpower.
But recent changes in General Data Protection Regulation (GDPR), the global crisis due to COVID-19, and other economic issues in India made this country less attractive in terms of outsourcing. Hence, many international companies are eventually withdrawing their customer services from India.
What makes India so appealing
– The cost of living as well as the salary range in the US is definitely high. Hiring local employees will entail higher costs and other expenditures like paying for employees’ insurance, etc. Even the rising salary range in India cannot compete with the most developed countries and it still remains competitive and offers the lowest rates.
– India is one of the most populated countries in the world with a population of more than 1.2 billion people and skilled manpower who speak English. This makes this country one of the biggest pools of talent.
– Indian market is adaptive and can meet all customers’ needs.
What is wrong now
It’s no secret that cost-effectiveness was the main reason for outsourcing to India. But the salary range has been constantly rising there. In fact, now the salary is rising even faster than in the pre-pandemic year. In 2022 it is reportedly going to grow up to even 9%.
Some other economic issues like high inflation rates impose a threat to the outsourcing market and make it actually leave the country.
The global pandemic poses new challenges for the outsourcing industry in India and even expedites moving back to Europe. Since the COVID-19 situation there is not safe yet and providing employees with technical devices for remote work presents another challenge for the field.
The time difference is one more reason for withdrawing from India. Time means money for the business. Having a team of people working in a different time zone might be a challenge. That is why Europe might be a better alternative.
What’s more, India has communication issues. This country slightly differs in terms of business communication, and it can eventually affect business productivity. Social and cultural differences and norms in India are a bit hard to adjust to.
Copyright and licensing happen to be a big issue for the outsourcing industry in India as well and you never know if you get copied or not. Indian companies and businesses tend to be sold over and over again that is why signing an NDA agreement with the company would be a wise decision.
All of the above-mentioned pros and cons of outsourcing in India make companies search for a better destination to outsource to. As a result, the global outsourcing market is transitioning back to Europe. Eastern Europe becomes an attractive place to outsource talents in particular. Would you like to try it? Request a quote from VAfromEurope and feel the difference.