1. Why should you choose India for IT Offshoring?

2. Agenda Introduction to offshoring Key drivers
Industries & market revenues
Key criteria for offshore selection (10)
Language
Government support
Labor pool
Infrastructure
Educational system
Cost
Political & Economic environment
Cultural compatibility
Global and legal maturity
Data and Intellectual Property Security
Location ratings
Comparison & Competitors
Conclusion

3. India as an Offshore Services Location
Largest democracy: 1.1 billion population
GDP growth over 8%; Gross GDP - $3 trillion – fourth largest economy
Primary offshore destination for large—scale, process-oriented work, such as application development, transactional business process outsourcing (BPO) services in which India’s "first shift" can provide 24/7 IT support.
10 categories (Source: Gartner Inc.) that organizations should consider when looking at a potential location for offshore or “nearshore” IT or business process services.

4. Key drivers for Global offshore/ outsourcing as a strategic alternative
Increasing global competitiveness
Access to global talent
Economies of scale
Process engineering and enhancements
Wage arbitrage
Increased profit margins
Improvements in quality

5. Key Industry Verticals
Telecom
Manufacturing
Transportation
Retailing
Utilities
Automotive
Pharmaceuticals
Banking & Insurance
HR & Medical

6. Global technology spending

7. Revenue Breakup – India Offshoring (2009)

8. Offshoring – Examples (BPO)

9. Key Criteria – Offshore location selection

10. Language
India is ranked 17th in the IMD global competitiveness ranking for English language skills.
India has a strong foundation in the use of English, which is the de facto business language across the country.

11. Government Support
Recognizes IT as a strong engine of job creation within the country
Endeavors to increase the country’s e-readiness by focusing on key emerging technologies.
Drive improved governance and transparency in government interactions with the citizens
Focus on IT education and IT-based education, technologies, systems and applications, broadband, smart cards, radio frequency identification, and networking technologies.
Heavy investments establishing Bio IT Parks, IT investment regions and the Trans Eurasia Information Network

12. Labor Pool
In 2010 India ranks seventh in IT skills by IMD Global on the availability of IT skills.
The size, quality and scale of the Indian labor pool continues to differentiate it from all other countries
Employment in the IT industry stands at 2.21 million, which is the largest pool of offshore talent in the world.
Reverse “brain drain” back to India has created high-end expatriate talent with overseas education and work experience

13. Talent Dynamics Top 5 American employers in India:
General Electric: : 17,800 employees Hewlett-Packard : 11,000 employees IBM : 6,000 employees American Express : 4,000 employees Dell : 3,800 employees
Top 5 Indian employers:
Infosys: 40,000
Wipro: 35,000
TCS: 100,000
Reliance: 120,000
Satyam: 35,000

14. Infrastructure
Govt. is spending 6% of its gross domestic product (GDP) on infrastructure ($37B)
proposal to increase spending on infrastructure to $1 trillion - highways, ports, airports, power plants and other infrastructure through 2016 to 2017
Recent overhaul of 3G telecommunications infrastructure, boost in power generation (nuclear) adding to output

15. Educational System
India ranks 20th in IMD Global's Educational System ranking of 2010 that looks at educational system's ability to meet the needs of competitive economy.
Ranks 13th on management education and 22nd on university education, has second-highest number of engineering graduates, after the U.S
Has one of the largest numbers of higher education institutions universities and 20,769 colleges
Private and public sponsorship of R & D initiatives

16. Cost
Even with salary escalation, India has a reasonable cost differential. 
On an absolute basis, the annual salary of a programmer with about three years' experience is $12,000 to $17,000
Diversified delivery center locations from Tier 1 cities to Tier 2 and 3 cities to achieve more-competitive labor rates
Look beyond cost savings as a long-term value proposition from India

17. The real economics of offshoring $1
$1.00
$1.45
0.67
0.33 $1
$.33
$1 previously spent in U.S., now offshored to India . . .
Taxes ($0.04)
Revenues ($0.20)
Local suppliers ($0.09)
. . . delivers value to India . . .
Cost savings ($0.58)
Goods/ services sold ($0.05)
Profits from Indian ventures ($0.04)
. . . brings savings and returns to U.S
. . . creates new value from reemploying U.S. labor*
. . . and makes the global pie that much bigger
* Estimate based on historical U.S. reemployment trends
Source: McKinsey Global Institute

18. Political and Economic Environment
Reasonably stable nation with a progressive economic mind-set and a stable government
Most recent data from Central Statistical Organization shows annual GDP growth of 8.8% 
High economic growth continues to attract investments in India, thereby fueling the overall growth of the industry
India is ranked 84 out of 180 countries on Transparency International's 2009 corruption perceptions index

19. Economic Outlook

20. Cultural Compatibility
A strong general cultural affinity with most English-speaking Western countries.
India ranks 12th in IMD Global's ranking of national culture that ranks countries on their openness to foreign ideas - ranks eighth in flexibility and adaptability of people
Has greater bilateral relationships at a people-to-people, government-to-government level.
India's growing economic strength, military prowess, and scientific and technical capacity, as well as the size, population and strategic location of the country, all strengthen its position

21. Global and Legal Maturity
India has 57 bilateral investment treaties with nations, including the U.K., France, Germany, Malaysia and Mauritius.
Has sound legal system and well developed financial network to meet international business standards.
The World Bank's "Doing Business 2010" report places India 182 out of 183 countries for "enforcing contracts."
Major modifications in current Indian cyber law
India ranked a joint 45th in the Freedom House Global Press Freedom Rankings  and 47th in the latest world audit ranking democracy

22. Data and Intellectual Property Security and Privacy
India has a sound data protection and security in place, various acts and laws introduced to strengthen IP rights and fight piracy
PC software piracy in India has declined from 74% in 2004 to 68% in 2008
IMD's World Competitiveness Yearbook 2009 ranks India 33rd for cybersecurity out of 57 countries

23. Asia/Pacific Offshore location ratings

24. IT Services Comparison
Main Destination for Offshoring IT Services (until March 2009)
Parameter
India
Canada
Iceland
Israel
Philippines
South Africa
IT Export Industry Size (US$, mn)
9,500
3,780
1,920
900
640 96
Active Export Focused IT Professionals
195,000
45,000
21,000
15,000
20,000
2,000
IT Employee Cost (US$, per year)
,000
36,000
25,000-35,000
25,000
7,000
18,000
No. of CMM level 5 Certified Companies 60 NA
IT Labor Force
Low cost, High quality
High cost, High quality
Low cost, Moderate quality
Moderate cost, moderate quality
Infrastructure
Average
Good
Main Positives
English language skills, highly qualified & abundant workforce, robust project management
Near-share, highly compatible cultures with UK & US
Large development centers of tech co's like Microsoft, Dell, Significant offshoring precedent
More shrink wrapped software production North America
Good English skills & cultural capability with experience
Language skills
Main Negatives
Ordinary infrastructure, some geo political risk
High cost of employment
High cost
Regional unrest
Low availability of project manager
Nascent BRO industry, lack of precedent
Source: Evalueserve, NASSCOM

25. Competitors
China is the most prominent challenger in terms of the criteria for infrastructure, education system, costs, political and economic environment, and government support.
Philippines, Russia, Thailand and Malaysia are also emerging in the global market, posing hard competition to Indian offshoring business.

26. Conclusion India remains first choice offshore destination
Provides competitive edge – cost –effective services, reduce operating costs and increases productivity, quality and efficiency.
So next time, if there is talk of outsourcing, India should emerge as the first destination!