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Why India?
IT Outsourcing India - Replicating the magic...
The world is discovering the fact that India is a super power
when it comes to developing IT solutions. Swept by the current of the latest
trend "IT outsourcing to India", we find many fortune 500 companies
like Microsoft, Oracle, Citibank, Morgan Stanley, Wal-Mart, AT&T, General
Electric, Reebok, General Motors, Sony, Boeing, Coca-cola, Pepsi, Swissair,
United Airlines, Philips, IBM, Lucas and British Aerospace beneficiaries.
A closer look at the factors fanning the potentials of IT outsourcing in
India.
- India's human resources
Being the world's second highly populated country, human
resources are a boon by itself. Just as the Gulf is renowned for its natural
resource of crude oil, and South Africa for its diamonds, India is proud of the
abundance and easy availability of its highly qualified and technically skilled
English speaking computer professionals; who are key to success in the field of
IT outsourcing to India.
- Cost efficiency of IT outsourcing in India
Significant cost saving can be achieved by IT outsourcing to
India, owing to the wide gap between the personal costs in India and that of
the developed countries. Offshore outsourcing to India offers considerable economical
benefits for those who are prepared to exploit the advantages of outsourcing.
- Standard quality that firms doing IT outsourcing in India guarantee
The Indian companies involved in IT outsourcing in India
provide high quality work, meeting international standards and complying with
the ISO & SEI-CMM standards. Three out of every four SEI-CMM 5 companies
worldwide is located in India. Thus India promises quality - IT outsourcing in
India as it has the potential to furnish these services perfectly.
- The reliable communication facilities
Excellent telecom, ISP, and cellular networks are available in
all cities & towns in the country. India prides in the reliable satellite
and submarine communication links that facilitate good band connectivity with
the rest of the world. Thus companies engaged in IT outsourcing to India, can
be in touch with the vendors without any connection hurdles. This plays a
significant role in determining the success of offshore IT outsourcing to India.
- Technologically advanced outsourcing firms in India
India's technologies offer excellent software solutions. The
applications include E-commerce, Business Process re-engineering, System
Migration, Maintaining Legacy system, System integration etc. India prides in
outsourcing facilities that are required to compete with others; which is yet
another reason as to why the world prefers It outsourcing to India.
- Galloping growth in Indian economy
The service sector in India contributes 51% of the GDP.
Computer software export was prominent with a growth rate of 40%-50% per year
during the 90’s. India being the second largest software exporter in the world
its large business houses and public sector units are growing steadfastly
towards raising economic growth..
- Stable government facilitating IT growth
India has a stable pro - IT government whose policies,
economy, GDP growth, taxation, power, telecom, industrial parks & special
zones have been helpful in improving the infrastructure as well as
communication. The government proves to be a great support for software firms
by further providing all the basic facilities required for an outsourcing
company to flourish thus playing a major role in contributing to the success
and well being of IT outsourcing to India.
- Indian government policies
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IT is regarded as one of the top 5 priority
industries in India. IT is a part of the national agenda, and policies are
framed so as to obtain maximum benefit out of IT outsourcing to India.
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The liberalization and deregulation initiatives
taken by the government are aimed at supporting growth & integration
with the global economy. These reforms have enabled the entry of foreign
companies to the Indian market. FDI investment from NRI's including
Overseas Corporate Bodies (OCB's); owned by the NRI's are warmly welcomed in India.
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The new National Telecom Policy has invited private participants to the
Indian telecom sector.
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The IT bill passed in 2000, gives a legal
framework for the recognition of electronic contracts, prevention of
computer crime and electronic filing of documents. NASSCOM along with the
government is playing a notable role in protecting the interests of the IT
sector. Thus with all these help, IT outsourcing to India has reached a
point of no turning back.
- Tax system in India.
The well-structured tax system in India, with the authority to
levy taxes is divided between the Central & State Governments. Direct
taxes, like personal income tax, corporate tax and indirect taxes like customs
duty are collected by the Central Government while State Government levies
local and state sales tax. Tax revenue as a percent of GDP has been constantly
on the rise.
- Taxes
A domestic company having entire management and control in
India is bound to pay 35.7% tax to the Central Government. The nonresident
Corporation has to pay 48% of the income derived in India from Indian
operation; income that is accounted to arise in India and income that is
received in India. Minimum Alienate Tax (MAT) is at the rate of 7.65% of book
profit of the companies.
- Tax Incentives
The tax incentives offered to the investors by the Government of India are a boon
for firms involved in IT outsourcing to India.
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