The Top Ten Milestone Dates in Indian Outsourcing

Think “India”, and as a refreshing change, what comes to mind is not elephants and snake charmers but “Outsourcing”. Over the last decade or so India has emerged as the global back office hub, and today it is synonymous with Outsourcing. NASSCOM (National Association of Software and Service Companies) has played a major role in aiding the success of Indian Outsourcing. It was set up with the prime objective of facilitating business and trade as well as act as a catalyst for the growth of Software, IT services and eCommerce. Certain milestones in the History of Indian Outsourcing are:

1. 1835 - One of the key reasons for India’s success in the global outsourcing boom has been the presence of a highly educated and English speaking population. The credit goes to India’s education system where English is used as the primary language across the country. This uniform education system based on the Western system was the brainchild of Lord Macaulay, who in 1835, proposed the use of English across schools in British India.

2. 1951 - Post Independence from the British, Jawaharlal Nehru initiated the setting up of the first of the seven Indian Institutes of Technology (IIT) at Kharagpur. These institutes are renowned the world over for churning out some of the best engineering brains in the world. They have also been the breeding ground for some of the best talent in the software and computer science field.

3. 1991 - Faced with a financial crisis India was forced to open its doors to foreign investment and liberalize its economic policies. As a result, it was easy for companies to set up satellite down link stations in India and connect to their home countries.

4. 1994 - Healthscribe, a medical transcription firm was set up which did medical transcription work for doctors in the US. This resulted in lowering the turn-around times and what’s more, transcriptions were being done for a much lower cost.

5. 1995 - Tata Consultancy Services announces that its Casepac tool developed for IBM will be able to help solve the Y2K problem. This was a revolutionary announcement as world over there were fears of major system crashes at the onset of the new millennium.

6. 1996 - This year saw major deregulation in the telecommunications sector, which led to lowering of costs and better connectivity in India.

7. 1997 - GE, a front runner among the world’s large companies sets up GECIS in India to leverage the English speaking, educated intellectual capital available. This BPO was set up to carry out back office operations for numerous capital businesses.

8. 1999 - The Y2K problem was on everyone’s minds and the only country that had a sizeable number of software engineers capable of resolving this problem was India. The availability of large fiber optic cables ensured that Indian engineers were able to do this work remotely from India. A large number of contracts started coming India’s way in this milestone year.

9. 2000 - Having successfully resolved the Y2K problem, Indian engineers were in demand once again with the emergence of e-commerce. A number of foreign companies were beginning to see the advantages of using Indian talent to manage their critical applications during the dotcom boom. The Indian IT Bill is also passed this year, which along with NASSCOM plays a major role in protecting the interests of the IT sector.

10. 2002 - The Dotcom bubble burst was followed by a big recession in the US tech industry. There was a renewed demand for Indian engineers by the American companies, as they were large in number and also because they were low cost. The companies that survived the dotcom bust were cash strapped, but yet wanted quality work at significantly lower costs.

By 2003 India became a primary destination for foreign companies to offshore outsourcing. By 2005 there was an emergence of Indian MNCs in this sector. According to the International Data Corporation (IDC), worldwide, this industry is expected to grow at a Compounded Annual Growth Rate (CAGR) of 9% during the period 2002-2006. Most of the top players in this field witnessed a top line year-on-year growth of nearly 34% over the first half of the current fiscal.