Offshore Outsourcing - Challenges In 2009

The year 2008-09 has not been very good for businesses. With the global economic calamity and recession, businesses across the world have suffered severe damages. But the worst hit has been for the outsourcing industry. But the trouble doesn't end here. In fact, the offshore outsourcing industry has many other challenges staring at face. Here are some of them...

Recession

There was a time when offshore outsourcing was considered to be responsible for recession. However, at present economic recession poses as a severe threat to the outsourcing industry. Because of the bad state of American economy, Indian outsourcing industry that is almost solely dependent on the former has to face severe impacts. American companies have reduced their IT budgets and that leads to less (or no) work being outsourced to offshore continents.

Company Scandals

The Satyam debacle that happened recently made the whole world take notice of what has happened and question the ethics of Indian outsourcing companies. The scandal had exposed the dirty corruption practices of the industry and the international companies are much more skeptical about transferring their work to India now. The corporate governance of India is at question here and trying to gain back the confidence is quite a challenge.

Other Outsourcing Hubs

In addition to the sad market situation, there is also pressure of increasing competition. Though India is the world's favorite outsourcing destination, there are other emerging outsourcing centers like Philippines, China etc. Though Philippines is poor and lacks political stability, it is heavily banking on outsourcing to bring in country revenue. Like wise China, Russia and other countries of Eastern Europe are starting to compete with the service providers of India. In fact, China is on the second position after India in the field of offshore outsourcing.

Obama and American Policies

Obama has strong anti-outsourcing views and he has proposed the removal of tax benefits for companies that outsource their work to offshore continents. This would discourage more and more American companies to send their jobs overseas. This would add on to the already declined amount of outsourcing. The Indian outsourcing industry is faced with the huge challenge to overcome on this regards.

Indian Politics and Uncertainty

The general elections have taken place in India. And the new government has been formed. But it is yet to see the policies that are created for the offshore outsourcing industry. In fact, till the period of uncertainty is there, there will only be a skeptical attitude towards the outsourcing industry.

Indian outsourcing industry is going through a bad phase. It has all these challenges to cope up with and come over. But then again, the concept of offshore outsourcing has immense potential that cannot be undermined by any business. It is a powerful business strategy to cut investment costs and get access to high quality services and thus expand their profit margins. And this is something all businesses look forward to. Thus even in the wake of all these challenges, the Indian outsourcing industry has all the potential to come through unscathed.