The Business of Outsourcing

The Phenomenon of Business Process Outsourcing (BPO)

Background

The staggering spike in the growth of the populations of the countries of South Asia along with the introduction of the Internet and the slew of technologies and personal computing which accompanied it, ushered in a new era of commercial development in the 90s. Further, the dot-com boom and the laying of fiber optic cable enabled cheap communication between these nations and the developed world, leading to the creation of an entirely new economic model. With the availability of cheap labor in China and the vast educated English speaking population of India, western institutions began to take advantage of the financial benefits of relegating the menial tasks of manufacturing to China and mundane programming work to India. Partly, this movement resulted from the opening up of India’s traditional socialist economy to foreign companies and partly due to the implementation of various incentives to lure outside investment. On the other hand, the chief cause of off shoring to China was due to the availability of cheap and plentiful labor.

I plan to utilize this website to assess these questions of outsourcing and off shoring, two very different, yet related phenomena, and further investigate the common misperception of these occurrences as the cause for the downturn in the US economy, to make it relevant for my target audience. Outsourcing has become a divisive political issue as well - for example, a poll conducted in 2004 found that 71% of American voters believed that outsourcing jobs overseas hurt the economy. Further, I hope to explore the reasons behind the recent signs of recession evidenced in the US job market and determine if there exists a tangible correlation between the slowdown and this trend of outsourcing. Besides analyzing the export of western software jobs to India, I hope to understand the dynamic of Japanese software jobs being moved to China, two cultures which have a seemingly ingrained animosity towards one another. In addition, the site will address the status of outsourced jobs within the context of the local society and the role they play in determining the economies of South Asian nations. As viewed from a western perspective, the booming economies of India and China seem to be an imposing threat – however when compared to the gross national product of these nations, the effect of the increase due to the influx of the jobs from the US and European nations is relatively miniscule. There is an inherent disconnect between the focus placed on outsourcing in the media and its material effect on the economy.

One final consideration is the idea of decreased security and potential fraud as a result of exposing sensitive information in an environment, which is not subject to the same controlled restrictions as a domestic outfit. There have been scattered reports of identity theft as an outcome of rogue employees, which I will attempt to consider in my research.

The Future

Currently, approximately 50% of India’s population is below the age of 25. In the near future, 5-10 years from now, I expect the trend of outsourcing to continue as the median age in India remains in the 20s to early 30s. However, taking a long term view, this phenomenon may well shift away from South Asian countries as the population begins to age and the upwardly mobile middle class is no longer satisfied by performing menial maintenance and tech support tasks. Currently, the major appeal of call centers relies on the fact that employees are willing to work throughout the night in order to maintain the same hours as their customers in the western hemisphere. As the employees age, however, the tolerance for working these hours will foreseeably decrease. As such, there are two distinct possible situations – either the jobs will move to a new untapped economy causing stabilization in India or the more complex research and development positions, typically performed in the US, will relocate to satisfy the greater technical potential of the software developers in South Asia. Signs of this second trend are already beginning to make their first appearance. Businesses have started to hire US educated Indian developers who are willing to relocate to their native country and help establish R&D facilities while holding local professionals to the same norms followed in the US. As a consequence of the lower costs of living, the developers are willing to provide the same quality of service while earning less money but possessing an increased consumption power.

With the proliferation of networking and further miniaturization of devices, the need for new software to take advantage of these platforms will remain high, resulting in a permanent need for outsourcing. There will be major changes in the Internet itself deviating away from delivery using simple 2D WebPages rendered using HTML to a more interactive form of the Internet, perhaps using multi-touch technology similar to the iPhone. It is my aim to update the site as is necessary to support any new technologies as and when they gain in popularity.

Revenue Model

Initially, I hope to support the site entirely through ad-generated revenue, easily implemented using Google AdSense or a similar service. An ad-supported site seems to be the most viable model since it allows the content to be freely accessible and easily searchable. As the site expands from its base as an information only website, I hope to enter into partnerships with outsourcing companies such as Wipro or Infosys and create a mutually beneficial revenue sharing agreement, by directing traffic to their services.

Audience