Outsourcing strategy of Multi-National Companies

….. Vishal Narayan

Why are MNC opening their office in India?

there are many reasons as to why MNC are opening their office in India. It is known fact that Indian are good in mathematics and that directly implies software.

So to use skill of Indian for their benefit there are two ways

* Sub-contract activities to an Indian company and get the benefits without investing much

* open your center in India and recruit indian and get the work done

Now comes the social & ethics  and political  obligation into picture (may not be necessary in same order 🙂 ) we have weigh the above approaches

 Sub-contract activities to an Indian company and get the benefits without investing much

This is time tested way and what some would could a logic approach to reap benefit of talent without much fuss. you have work packages to execute and you them to companies and get the work done. This model is very good as the company does not have to deal with the regular human management aspects

 open your center in India and recruit indian and get the work done

Opening center in India is good as long as you have bulk of non-core activities and at the same time you want to project your company as global company and also want to acquire some government projects which makes it mandatory to invest certain portion of your profit back in the country.  So it is win-win situation for both India engineers and company.

Now we will look into the mix of above two models. A model which is currently hotly debated in Europe and US. A model where in the company opens with off shore center to manage indian sub contractor.

Yes this is model which gets the best in terms of cost (while discussing above two models the CONS where left out for this section 🙂 )

This could be ery well explained by a simple scenario

Let us take a company based in US or Europe. They outsource sizable amount of their activities to Indian companies but due social obligation and other regulation they cannot ask for cost to be less them certain amount. so there is threshold limit below which you cannot go in terms of cost.  Now if that company opens office in India and then the sub-contracting activity is floated from India office and the quotes are invited in Indian rupee without any thread attached to the laws in Us or Europen then you get the best price and at the same time you have something to feed to your india office (non technical stuff) registering yourself as Multinational without worrying about the backlass at home.

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