SWOT analysis | India as an offshoring destination

North American and European cos will move 750,000 jobs to India and other low-cost nations by 2016

With its rich experience in offshore services and an enviable talent pool to boot, India is one of the most sought-after offshoring destinations. As international firms are focusing on lowering costs, there has been a flow of offshoring, especially of non-critical roles,to low-cost nations.

According to US-based Hackett Group Inc, North American and European companies will move 750,000 jobs in IT, finance and other business services to India and other low-cost nations by 2016.

Here is a SWOT analysis of India:

Strengths

. Skilled workforce and huge talent pool (4.4 mn graduates and postgraduates join the workforce annually)

. Specialised labour pool from existing KPOs (India was the first to enter the outsourcing and offshoring market)

. Favourable and supportive policies for offshoring

. Larger English-speaking workforce, compared to other offshore destinations
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Graphics | New business services jobs moving to low-cost geographies, 2012 - 16 (%)
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Weaknesses

. Time-zone difference with the US

. Focusing on developing infrastructure in tier-II cities, but experienced talent pool is not ready to move there

. Tier-II cities lack in skill availability at mid- and senior-level management
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Graphics | Countries preferred by various organisations for offshore finance functions

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Opportunities

. Tier-II cities are one of the most cost-effective destinations in the world

. Increase in workforce and talent pool in tier-II cities

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Graphics | India's talent pool FY12 (%) (total 4.4 million)
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Threats

. Rising operating costs in tier-I cities (salary increase and rise in rentals)

. Competition from new offshoring locations such as China and the Philippines

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Graphics | Operating cost per FTE for transactional KPO services, 2011 ($ ‘000) (per annum)
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Graphics | Operating cost per FTE for IT services, 2011 ($ ‘000) (per annum)
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