Business, Economics and Jobs

India: What is outsourcing?


An Indian man walks past old computer screens outside a shop in New Delhi's largest computer market at Nehru Place.


Manpreet Romana

NEW DELHI, India — Here's a news flash for you: The outsourcing business isn't at all what you think it is.

Based on its image in popular culture, you'd think “business process outsourcing” was limited to handling phone calls for technical support and dunning people with outstanding credit card payments.

But that stuff represents an ever smaller segment of the BPO business — which also includes high-growth areas like data mining. And BPO itself is only a small part of what's known as “outsourcing.”

According to India's National Association of Software and Services Companies (Nasscom), India's BPO segment is worth about $16 billion, and growing at 12 percent. But other types of work both accounts for more money and higher growth.

IT services – which includes not only application development and maintenance but also testing, infrastructure management and system integration, and all the other stuff you think of your in-house IT guy as doing – grew 19 percent this fiscal year to account for exports of $40 billion, according to Nasscom.

Engineering design and research and development — the stuff you think your in-house engineers are doing — grew 14 percent to generate export revenues of $10 billion, thanks to a decline in the number of people with the necessary skills in the US and Europe.

Outsourced Software Product Development (OSPD), already worth more than $1 billion a year, is expected to grow 17 percent this year.

And in more bad news for you IT guys, remote management of computer servers, networks and desktops, or “RIM,” more than doubled to reach $7 billion.

The upshot? Maybe you should start working on understanding that Indian accent, instead of mocking it. The next Raj you talk to might be your boss.