History of Outsourcing
Dot Com Bubble
The dot-com boom along with the rise of the Internet in the late 1990s saw an absurd amount of investment in the most ludicrous ideas. Along with this investment from venture capitalists and the foundation of these startups, came the need for the management of massive amounts of back-end data. The rush to digitize information for the Internet required copious numbers of technically skilled workers, which US companies found in abundance in India. The boom 
helped drive innovation and further set the stage for the outsourcing movement. The mundane data entry tasks being performed required fiber optic cable to be laid between the US and India to facilitate cheap communication.
The bubble in the ‘90s caused the telecom companies to believe that the demand for bandwidth would continue to grow at an exponential rate. Caught up in the hype surrounding the magical Internet, they were more than willing to fund this cost in exchange for a future of charging companies to transmit traffic over their cable. The telecom companies neglected to take note of when the demand actually began to slow down and they continued to build larger and larger networks. Approximately $1 trillion was spent by these companies in wiring the data “silk route” between Asia and America.
When the bubble finally burst, almost all the telecom companies went bankrupt but the benefit of their wiring efforts continued to reap rewards for India. India now had the infrastructure needed for enormous amounts of data to be transferred between the two nations at extremely cheap rates, laying down the foundations of outsourcing. Moreover, over the course of the dot-com bubble, companies in the US had established lasting contacts with outsourcing firms in India. When the US economy began to recover, the companies, which survived the massacre of the dot-com battleground, instinctively went back to the firms in India to satisfy their needs once again.