Q. What is Outsourcing?

 

Ans. outsourcing is the passing of service provision or production to another internal or external party.

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Q. Why to go for outsourcing?

 

Ans. The benefits of outsourcing are wide and varied, and tend to be specific to individual situations. However, generally, the following are usually amongst them:

• The ability to concentrate on the businesses own core functions
  
• Delivery of lower costs due to economies of scale
  
• The potential freeing of resources for other purposes and tastes
  
• Higher quality service delivery due to the focus of the supplier
  
• Less dependency upon internal resources
  
• Increased flexibility to meet changing business and commercial conditions
  
• Tighter control of budget
  
• Likelihood of lower ongoing investment required in internal infrastructure
  
• Potential acquisition of innovative ideas
  
• Potential improvement of credibility due to association with superior providers
  
• Potential new market access through the supplier's network
  
• Potential cash influx resulting from transfer of assets to the new provider
  
• Possible lower ongoing internal infrastructure investment required
  

Q. When considering transition issues, what factors broadly need to be considered?

 

In identifying the possible transition issues, it is advisable to concentrate on the factors of production and how the internal unit fits into the organization:

• People
• Facilities (space and related services)
  
• Equipment
  
• Hardware/software
  
• Third-party contracts
  
• Processes, functions, and activities, processing inputs and producing outputs
  

Q. Why India an attractive destination for outsourcing?

Ans. India is well positioned to derive benefits from the accounting outsourcing market and become a key hub for these services. The country's strengths in the form of low staff costs, a large pool of skilled, English speaking workforce, conducive policy environment and Government support has made India a popular choice for customers seeking outsourcing services. India's advantage as the BPO destination can be summarized as follows:

• Two million graduates each year (Existing Pool: over 25 million)
• English speaking and IT savvy workforce.
  
• Indians view Accounting jobs as a good career option.
  
• Availability of qualified personnel across various industries.
  
• Cost reduction up to 40%
  
• Government support for BPO/KPO industry
  
• Adherence to leading quality practices by various organizations. Certifications are
  given importance.
  
• Lower infrastructure costs
  
• Favorable time lag: 12 hours with US & 5 hours with Europe
  
• Overnight turnarounds possible
  
• Resources with experience of financial and legal systems similar to the west
  
• Strong domestic IT services industry to support BPO/KPO industry