Our previous posts have detailed the fact that 50-75% of the Fortune-500 companies have outsourced work to India and the Indian IT outsourcing industry is growing by 25-30% on average annually. Are these the most important reasons to choose India as your IT offsourcing destination? Well not quite so, the figures stated above are only the consequences and not the reason of the Indian outsourcing success. The following are the reasons for India to emerge as the worlds top IT outsourcing hub.
With a population of 1 billion and ever expanding army of highly skilled science and English graduates India has unmatched potential in the human resources department even exceeding China in this area.
IT Outsourcing to India results is considerable savings:
India offers many salivating options to a company's CFO through major cost savings in men, materials and processes. As Indian IT personnel are willing to work for far less salaries than their western counterparts and are no less skilled they offer the required flexibility and that too at far lower costs.
High Quality Services offered by Indian Outsourcing Firms:
If there were any lingering doubts about India's ability to consistently deliver high quality IT services, now is the time to put them to rest. India boasts 3 of every 4 SEI-CMM 5 companies globally. Indian BPO firms comply with all global quality standards including the stringent ISO and SEI-CMM standards.
State of the Art Communication Infrastructure:
Indian companies offer plenty of high-speed bandwidth via satellite connectivity, submarine cables and optical fibre networks. Add to this the fact of countrywide mobile telecom coverage and you have 24/7 flawless connectivity with vendors and clients 365 days of a year.
Rapid Economic Growth in India:
Indian economy has been witnessing an 8% plus growth for many years now and the Indian growth story has largely been scripted by the Services sector, which accounts for nearly 55% of the GDP. This has catapulted India in the position of world's second largest software exporter, a leading IT superpower indeed.
Stable Polity with Clear IT Policies:
After the political turmoil of the 1990's when governments fell like ninepins India has witnessed new political maturity with large but stable coalitions that have continued the market-friendly reforms introduced in 1991. The biggest beneficiary of these policies have been the IT and ITeS sectors that have witnessed unprecedented growth in the past decade. The government has also cut down on red tape in the form of unwanted bureaucratic interference by introducing single window clearances for setting up IT projects and firms and granting numerous benefits along the way. The Indian Parliament has enacted the Information Technology Bill, 2000 recognising electronic contracts, barring electronic crime, and e-filing of documents. India also has a nodal association of the IT companies called NASSCOM to provide a blue print of the needs and progress path of IT vendors and companies in India.
Attractive Tax and non-tax Incentives for IT Companies:
The Central Government has provided many tax and other incentives to boost investment in the IT outsourcing industry in India. Some of the benefits accruing to IT firms are:
10 year tax holiday for companies involved in construction and/or maintenance/operation of an infrastructure complex.
10 year tax holiday to firm that generate and/or distribute power .
5 year tax holiday to telecom firms providing internet and broadband services.
10 year tax holiday to IT firms setting up venture in notified IT parks and Special Economic Zones (SEZ).
5 year tax holiday for IT and other firms setting up a project in backward districts and states.
IT outsourcing and other firms also get tax incentives on exports as tax is deducted on profit for exporters setting units on SEZ's, Electronic Processing Zones (EPZ), Software Technology Parks (STP).
Attractive tax incentives are available on expenditure for research and development including deduction of 150% on scientific research and 10-year tax holiday for scientific and industrial research R&D companies.
From this short summary of Indian outsourcing strengths it should also be mentioned that various Indian firms involved in outsourcing have their own relative strengths and Rose India is no different. We suggest you inquire about our capabilities and how associating with us can maximise your outsourcing investment in India.
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