IndustryIndian Outsourcing Industry- How Did It All Begin

August 22, 2019by Arudhi Verma0
Indian outsourcing industry- silicon valley of india

Advent Of The Indian Outsourcing Industry- A Story Worth Narrating 


Outsourcing has now been widely recognized as a process that is imperative for any business that aims to become a big shark. While building an empire, you either stay ahead of the pack or watch your vision crumble like a cookie. And it certainly isn’t possible to walk past the competitors with the burden of everything that needs to be done, on just one shoulder. This is where outsourcing comes in the winning picture.

The process was the most underappreciated contribution to the drastic success of businesses in the earlier days. But it just doesn’t mean that outsourcing wasn’t rampant during the old times. Since the 1700s, manufacturers, after discovering a huge scope of regulating finances by outsourcing, started lending out the contract of specific tasks to countries with cheap labor. But it was only after 1989 that outsourcing got its long due acknowledgment as a well-defined business strategy since it was the time that companies started focussing on the cost-cutting methods. The breakthrough of the process witnessed the outsourcing of activities like accounting, human resources, data processing, etc.

So, what led to the advent of Outsourcing in India and what made India the global hub of lending out non-core activities? Let’s find out-


The Treading Steps Of Outsourcing In India 


Out of all the sectors outsourcing the building blocks of their vision to India, the largest share remains occupied by the IT sector. Therefore, outsourcing became the nub of India’s professional picture only when IT companies entered the stage and repositioned the spotlight. 

According to the book Evolution: Decoding India’s Tech Story, by Kiran Karnik, one of the former Prime Minister of India visualized tech-novation of the entire system of the country during the 1980s. However, the introduction of technology was vehemently opposed by the Indian bureaucrats since the use of computers and the inclusion of typing work was strangely compared to the work of a typist. It took a hefty amount of efforts from the official’s end along with NASSCOM to persuade the people in the system in favor of the introduction of technology in the Indian scenario. 

The time outlining 1990s was the time when the global economy was on a revamp and India too couldn’t stay untouched with the reform. The combined efforts of NASSCOM and the Indian government resulted in the formation of laws and orders that significantly eased foreign trade and outsourcing in India. Things seemed to be going pragmatic for not just the Indian economy but also a large number of engineering and other proficient graduates since the reforms in Indian outsourcing policies opened multiples doors of employment opportunities in the country. 


One incident that can surely be recognized as the golden benison of the Indian outsourcing industry was the deal of 1989 with the American company General Electric. This was the year when then CEO of General Electric Jack Welch visited India to meet and persuade the Prime Minister of India in office charge during the term, about purchasing the aircraft engines from G.E. However, the former Indian Prime Minister was accompanied by his Technological Advisor Sam Pitroda who put the condition of acceptance of the deal only in exchange of the outsourcing contract of $10 million worth IT work from the US to India. 


By then, Welch had already scrutinized the huge potential of India as the outsourcing hub and in the blink of an eye, accepted the condition, thus, leading to the advent of outsourcing boon in the country. The current biggest software company of the world, Wipro, was the first company to enter into the IT outsourcing contract in India. 

However, not all good times stay and so happened with Indian outsourcing industry as well. The wounds of 9/11 terrorist ambush radiated widespread pain, both emotionally and economically. American industries faced resentment in outsourcing to India and there were publications of cynical articles about the India outsourcing scenario in the Western country. This was the time when NASSCOM was all set to open up an office in America to accelerate the operation but the strategy was vanquished by an unforeseen event. Still, NASSCOM managed to emerge out of the fiasco with utter grace and diligence.


There has always been the fair share of ups and downs of the Indian market when it comes to foreign companies delegating the non-core responsibilities of their core businesses but every time, the circumstances have been dealt with arrant precision and there is no other way that a country can manage to stay the big shark in an industry. 

Arudhi Verma

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