Challenges in outsourcing to India

Hi Everyone

During the weekend I came across an article named Bad Business outsourcing to India. It is written by SINTEF which is the largest independent research organization in Scandinavia.

As I have worked quite a lot with exactly outsourcing I found the article quite interesting and wanted to share it with you. Is there anyone else here who have the same experience, or another experience? Please do let me know.

Another report that is worth sharing is written by SIMULA, which is another Norwegian research organization. You can find the report here. However, it is in Norwegian, so not too easy to read for non-Norwegians.

Talk to you soon!



3 thoughts on “Challenges in outsourcing to India

  1. Nice link karsten. Sintef has some good points.

    Some companies think they can just run the porject as if it was an local project, without understanding the challenges and having the experiance.

    Norwegian companies do not always understand the commercial aspect of Indian business. Indian companies are very shrude and know how to milk the customers. Typically large companies will select a large Indian vendor. Norwegian companies have small projects and language issue and unknown brand. The best emplyees, from the vendor side, prefer to work for well known US companies. Looks good on their CV.

    There is a certain element of sabotage and vested interest in seeing offshoring projects fail.

    How to succeed?
    select a vendor who values you as a client. In stead of focusing on referances, focus on the eagerness of the top management.

    Demand that the vendor specifies the wages they will pay to their employees. Keep a dialog with each person in the team. A small increase of kr 5000 per month may make key emplyees stay. For kr 10 000,- per month, you will get very smart and loyal people, in a small city.
    Even the vendor will be happy, as the high wage will increase the esteem of the vendor and give him predictable income.

    Try to keep development and support in one place.

    Select a city where your own employees will like to stay. Mumbai, Bangalore or Delhi may not be all that pleasent.

    The savings can be huge and give the entire company great advantage. An exampe.
    A team of 10 people can cost arround 1,5-2 million kr in India. Compared to the same team in Norway, which may cost 8-10 million kr.

  2. Before doing business in India, it is important to understand the cultural diversities in India. Additionally, most of the companies are managed by families and all the key decisions are taken only with their approval. Therefore, it is important to consider sourcing in India as a project rather than simple purchasing activity. It is very important to spend adequate time and resources to identify potential sources before starting any serious business discussion.


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