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In order to meet the growing international demand for lucrative, customer-interaction centers, many organizations worldwide are outsourcing these services from locations like India. India has inherent strengths, which have made it a major success as an outsourcing destination:


  • A booming IT industry, with IT strengths recognized all over the world.


  • The largest English-speaking population after the USA.


  • A vast workforce of educated, English speaking, tech-savvy personnel: A boon in a high-growth industry faced with a shortage of skilled workers.
  • Cost-effective manpower: In a call interaction center operation, manpower typically accounts for 55 to 60 percent of the total cost. In India, the manpower cost is approximately one-tenth of what it is overseas. Per agent cost in USA is approximately $40,000 while in India it is only $5,000.
  • Technical support: India graduates about 100,000 engineers each year. These can be used in call centers for troubleshooting/tech support, as the salaries are dramatically lower than in Europe or the US.

Government policy

  • The Government of India has recognized the potential of IT-enabled services and has taken positive steps by providing numerous incentives.
  • IT is one of the Government of India's top five priorities.
  • The National IT Task Force submitted its 108-point Action Plan to promote IT in the country. The Government of India has approved the plan and is in the process of implementing it.
  • A separate Ministry of Information Technology was set up to expedite swift approval and implementation of IT projects and to streamline the regulatory process.
  • Information Technology Act 2000: The Information Technology Bill that was passed in the Indian Parliament in May 2000, has now been notified as the IT Act 2000. The IT Bill brings E-commerce within the purview of law and accords stringent punishments to "cyber criminals". With this, India joins a select band of 12 nations that have cyber laws.

Regulatory Enablers

  • 100% foreign ownership permitted in IT Enabled Services industry unlike other sectors where foreign ownership is restricted.
  • Software Technology Parks (STPs) established.
  • To provide ready to plug IT infrastructure and telecom facilities.
  • Single window clearance for all regulatory compliance issues.

Infrastructure Enablers

  • Basic, Cellular, Paging and Internet Services privatized.
  • Domestic leased circuit tariff reduced by 80% in last 1 year.
  • International Internet Gateway privatized-likely reduction in tariff.

As India emerges as a global outsourcing hub, the industry is forecast to explode at exponential rates - from 23,000 people and $ 10 million pa in 1998 to over a million people and revenues in excess of $ 20 billion by 2008. Pivotal segments are going to be back office operations, medical transcriptions, insurance claims processing, customer interaction centers and content development. Current trends suggest that the country is well on course for achieving the above target.

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