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SITE TRACKER – INDIA

Story by: Kate Tulloch-Hammond

 

Dabbawala may seem like a new dance move to some, but in Mumbai, India, more than 125 years ago, this group of visionaries pioneered what are today, the Grubhubs of the world. Lunch, outsourced. Dressed in white outfits and traditional Gandhi caps, they were innovators in outsourcing mealtime by delivering homecooked lunches every day to thousands of office workers. Business still booms as to this day, an army of 5,000 Dabbawalas serves more than 200,000 Mumbaikar on any given day. Just a little fun fact about India, this edition’s featured region.(1)

Fast forward 125 years.

 

THE GOOD 

India’s emergence as one of the most popular outsourcing destinations globally has been extraordinary; the country’s name is practically synonymous with the words “outsourcing,” “sourcing” and “offshoring.” With more than 1.25 billion people, the country has transitioned to become the fourth largest economy in the world and continues to be among the fastest growing emerging economies, globally. The services sector has been the fastest growing, contributing 65 percent to the overall GDP. Investor confidence not only remains strong, but it also continues to grow with proven foreign direct investment increasing manifold over the years.(2)

 

Several factors have contributed to India’s success in recent years, even amid tumultuous times with corruption and bureaucracy in its government, changes in banking leadership, and the implementation of the Goods and Services Tax (GST) – the GST rate is between double to four times that levied in other countries; its launch was boycotted by several members of India’s Congress. Despite all of this, the economy and outsourcing industry continue to grow.

 

One reason for such success: Narendra Modi. When he took over as Prime Minister of India in 2014, it gave a substantial boost to investor confidence with the proposal of numerous reforms and policy changes such as the “Make in India” campaign that promised to bring about a significant change.

 

Another timely boost for India: Brexit. With the Brexit decision causing most developed nations to feel uncertainty toward European countries, top executives of reputed multinational organizations like Google, Apple and Microsoft, paid visits to India, as its economy offers ample opportunity for investors. In a word … potential.

 

Additional factors contributing to India’s growth: incentives, education and language. Through several enticing “offers,” including 10-year tax holidays and construction of Special Economic Zones (SEZs), the Indian government has paved the way for continued growth. With India’s large labor force, especially graduates with IT skills and English proficiency, along with India’s motivational nod of approval, large scale sourcing projects in the country continue to be a unique selling point
for the Indian market.(3)

 

THE BAD

While India has a very mature outsourcing industry, the country faces numerous challenges:

Employability: attrition continues to be high at 16.2 percent in ITO, 36.7 percent in BPO

Labor force: substantial in size, employability and absence of key skills present challenges

Infrastructure: while considerable progress has been made in certain areas, basic infrastructural necessities such as steady water and power supply, good road systems, adequate transportation facilities and lack of wide-spread Internet connectivity need considerable improvements

Business environment: per the World Bank’s 2016 Doing Business report, India ranks 130 out of 189 global economies – contributing to this are low credit coverage, poor strength of legal rights index, high number of annual tax payments, cumbersome export and import documentation procedures, absence of a public registry and limited availability of credit-related information through private bureaus (4)

 

THE FUTURE

That said, India continues to progress. However, for the country to maintain and grow with the outsourcing industry, it needs to improve on current strengths while looking for new opportunities. This includes keeping up with the latest in trends, technology, research and development, and investing in top talent. It also needs to improve its infrastructure and lack of ease in doing business.

1: Dabbawala – Mumbai Dabbawala (http://mumbaidabbawala.in/)

 

2, 3, 4: Supply Wisdom & Neo Group: Location Assessment – Sourcing in India; Sandeep Suresh, Ashish Kumar, Chaithra Hanasoge – Authors.

 

About Neo Group: Founded in 1999, Neo Group helps organizations meet business objectives and address business challenges by leveraging global services and sourcing. To learn more about Neo Group, please visit www.NeoGroup.com.

 

About Supply Wisdom: Supply Wisdom is a unique cloud-based service that provides data and intelligence for sourcing risk and opportunity monitoring of global countries, cities and suppliers. To learn more about Supply WisdomSM, please visit www.SupplyWisdom.com.

Dabbawala may seem like a new dance move to some, but in Mumbai, India, more than 125 years ago, this group of visionaries pioneered what are today, the Grubhubs of the world. Lunch, outsourced.
With more than 1.25 billion people, the country has transitioned to become the fourth largest economy in the world and continues to be among the fastest growing emerging economies, globally.
Additional factors contributing to India’s growth: incentives, education and language.
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