T a s d I q L a y m a n

THE RISE AND FALL OF OUTSOURCING
China probably provides the majority of outsourcing for global manufacturing 
firms, but when it comes to offshore locations for service industries, no other country 
comes close to India.
Take the IT industry. A whole range of products such as cars, Disney animation 
and Windows software rely on the skilled workers of India. It’s estimated that about 
two thirds of all offshore IT work is carried out in India. Similarly, nearly fifty per cent 
of all business process outsourcing (BPO) services are now based in India.
The growth of outsourcing in India began in the early part of the twenty- first 
century when western businesses realized they could outsource routine work in order 
to concentrate on their core activities. India offered the outside expertise needed 
because of its ready supply of highly qualified graduates with English-language skills. 
The sector grew quickly, and by 2010 it employed around a million people.
Since then, an estimated two million business-services jobs have shifted 
overseas from the USA and Europe to countries such as India, China and Brazil. The 
revenue from export growth in a country like India also allowed greater investment in

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infrastructure and training facilities, so that now the country is able to offer even greater 
expertise to multinational companies, especially in IT.
However, there are now signs that the outsourcing opportunities are slowing 
down. There are three key reasons for this: one reason is that salaries in the sector have 
risen very quickly - ironically - because of its financial success. As a result, western 
businesses don't make the cost-savings they once did. In addition, a lot of companies 
have already outsourced all the IT and BPO work they can - there is nothing left to 
outsource. Finally, and perhaps more worryingly for the outsourcing vendors in 
countries like India, their clients are starting to relocate parts of their business closer to 
home where they believe they have greater control over areas such as quality, and 
where their IT and BPO operations are not several time zones away from head office.
Some analysts are predicting that outsourcing as we have known it might come to 
an end by 2025.