Why is India the focus for IT outsourcing?

NetworkingStudent

When concerning outsourcing, why is it that a majority of companies choose India for IT

based jobs? How come they don’t choose other countries such as: Africa, Ethiopia, or

Russia? I’m just curious because it seems like 90% or more of the off shoring/outsourcing

of IT jobs seems to be India based workers. I want to know for my own personal

knowledge. I know that by going to other countries that you can save a ton of money,

because you can pay the workers a lot less; however, I’m looking for specific reasons as to

why they chose India.

Why do they choose India for IT outsourcing?

Where do the India workers get their training and education?

Does the India and Untied States government play a big role in the number of India based IT workers?

eMeS

NetworkingStudent wrote: »

When concerning outsourcing, why is it that a majority of companies choose India for IT

based jobs? How come they don’t choose other countries such as: Africa, Ethiopia, or

Russia? I’m just curious because it seems like 90% or more of the off shoring/outsourcing

of IT jobs seems to be India based workers. I want to know for my own personal

knowledge. I know that by going to other countries that you can save a ton of money,

because you can pay the workers a lot less; however, I’m looking for specific reasons as to

why they chose India.

Why do they choose India for IT outsourcing?

Where do the India workers get their training and education?

Does the India and Untied States government play a big role in the number of India based IT workers?

Labor, regardless of the industry, always moves to where the lowest cost can be paid for the highest quality.

I wouldn't say that 90% goes to India; and there is significant outsourcing to Russia/CIS over the past 15 years.

I would argue that in the case of India, outsourcing has somewhat failed. In my experience there are some very good smart people over there, however, on the whole I have seen great dissatisfaction with outsourcing to India. Also keep in mind that many Indians would rather (and do) live in the US.

During my time in this field, the first outsourcing location was Ireland. A lot of development activity moved there in the early 90's. The next was significant outsourcing to Russia and then India.

The reason is I think the same. You have a surplus of highly educated people in all of those locations who are willing to work for much less than Americans that might be even have less education. You also have largely stable governments that give incentives to companies that move jobs to their countries. This lowers the overall transaction cost for the companies, and so they move jobs.

Why not Africa? (Or for that matter, why not South America?). Africa for the most part has non-functioning governmental structures. There are some exceptions, however the bulk of Africa doesn't work well from a perspective of government. In Africa, to get business done, there are always lots of random taxes and kickbacks that make things happen. When this is the case, it increases the cost for organizations, and they don't move jobs there. Also in Africa you have a population of people that are largely uneducated compared to other parts of the world. In South America you have much the same situation; a largely uneducated population and high transaction costs in the forms of kickbacks and graft because of non-functioning governments.

IMO, some outsourcing activities work and work well; Ireland being an excellent example. Others look good on paper, look good in the short-term, but overall result in increased costs; India being the best example I can think of there.

Also IMO, outsourcing, when it works well is not a bad thing. It turns simple routine jobs into commodities, and lets smart, well-educated and innovative Americans work towards making the next innovation.

MS