The Business of Outsourcing

Young Population

A main factor for the growth of India’s BPO industry as well as its IT sector is the youth of its society. Approximately, 54% of India’s population is under the age of 25. This figure equates roughly to 550 million people. Further, each year around 200,000 engineers graduate from colleges all across India as compared to just 70,000 from American universities. A recent article on Forbes.com cites figures by Nasscom that state that IT services will employ approximately 4 million people in 2008, and account for 7% of gross domestic product and 33% of India's foreign-exchange inflows.

India therefore has adequate human capital – the main problem lies in retraining these workers to help create competent programmers and adjust them to the working culture. Besides the top layer of universities such as the Indian Institutes of Technology for engineering and the Indian Institutes of Management for business, instruction at other colleges is often very poor. The instructors are underpaid, poorly qualified, and frequently absent. This requires companies to create extensive retraining programs for fresh graduates. These programs usually last for upto six months, which creates a delay between the time that an employee is hired and when he begins working on his first project.