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locations not just because of low costs, but also for the large English-speaking workforce. Based
on this workforce and its early entry into the global sourcing market, India has built the largest
export sector for IT services. India exports about $50 billion in computer and IT related service.
This is about four times that of the United States and almost an order of magnitude greater than
any other location. In the BPO sector, India has a leading position, but not as dominant as in IT.
Based on the IMF measures of the export of miscellaneous business services, an imperfect proxy for BPO services, India is in the top three, but falls behind the United States and China. With a
pool of 4mn annual graduates only 25-30% are readily employable. A total of 467 million of
workforce although disguise the effect of poor adult literacy rate (66%) which is much lower
than china’s 93%. So in the size of work force and high proportion of English speaking
population we have an upper hand compared to competitors but at the geek quotient we are
lagging and have to work.
3. Cost competitiveness
Employee Compensation- Employee compensation is the largest cost component for any
outsourcing operation whether it is web development, application maintenance, human resource
outsourcing or customer care. A typical project or outsourcing effort will include a number of
junior resources, and some high-skilled, senior oversight and project management. Junior
resources typically provide the largest cost savings and India is no exception. In the information
technology area, software engineers/ web developers with 1-4 years experience are about 11% of
those in the US. Annual salaries vary across locations and skill levels, but typically range
between `230,000 and `400,000 or $5,000 to $9,000 US dollars.
Senior, more experienced resources are in shorter supply in India and thus the difference in cost
is not as large. Senior software engineers/ web developers with 10 to 20 years experience are
about 30% the cost of comparable resources. Salaries vary more dramatically than junior
resources and can range from `800,000 to `1,800,000 or about $17,000 to $40,000 US dollars
Operational cost- Other common outsourcing costs are typically lower in India, but there are
some exceptions. Office occupancy costs vary across cities and from central business districts to
the suburbs. Most Indian outsourcing operations will have lower occupancy costs than similar
US operations, however high end real estate in major Indian cities can be significantly more
expensive than similar office space in the US. For example, office occupancy costs for grade A,
prime location office space in Mumbai, the financi...
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- Winter '14
- Business, Business process outsourcing, offshore outsourcing industry