6 reasons to outsource IT to India right now

A smoothly running IT department is an essential part of any business, especially now that work from home has become widespread and cloud computing has become more important. Europe alone faces a major shortage of around 30% of suitable IT personnel. And the professionals who are available come at a high price. In India, these good, experienced and affordable IT professionals can be found: in fact, India has the largest IT labor market in the world.

India is one of the most popular outsource destinations in the world, with around 65% of all outsourced IT and R&D globally being moved to India. Head of IT for Maier+Vidorno, IndiaConnected's partner in India, Satish Tripathi shares the six reasons why India is the best outsource option for your IT department or R&D team:  

1. An extensive pool of highly trained professionals

India has one of the largest talent pools in the world. Every year, around one and a half million students come from the country's top technical universities, eager to get a job with a foreign multinational. Becoming a web or mobile app developer is one of the most popular career options among young Indians. The abundance and availability of dedicated and trained offshore developers makes India the place to have an IT or R&D team up and running in a short span of time. In addition, Indian IT professionals are trained in the latest technological solutions and applications, which are still considered challenging in other places of the world. India not only pulls the proverbial outsourcing cart, but also takes the lead in implementing the latest technology trends.

2. Outsourcing in India is budget friendly

Cost is often the deciding factor in opting for outsourcing and in the case of India, perhaps the most tempting factor in setting up an IT department in this country. Development costs in India are 30-35% lower than in the US and Europe. The average hourly wage of an Indian IT professional varies, depending on knowledge and experience, between €15 and €35 per hour. This is considerably lower compared to the salaries of developers in Western countries, which are around 85 to 125 Euros per hour. Outsourcing your IT or R&D to India can save the company up to 65% of its operational costs.

3. Reliability and high quality standards

Companies providing outsourcing services in India deliver high quality work that meets all international standards. Indian outsource parties work with:

• The Capability Maturing Model (CMM), which indicates the level of software development in an organisation. The model distinguishes five levels, of which 1 is poorly developed and at 5 the development process runs like a well-oiled machine. More than 75% of the worldwide CMM Level 5 certified companies are located in India.

• The International Standard Organisation (ISO 9000), which guarantees the quality of design, development, production and installation. India has the most ISO-9000 certified software companies in the world.

• Total Quality Management (TQM)

• Six Sigma Quality Certification

• Customer Operations Performance Centre (COPC) that ensures the delivery of quality software within the deadline.

With the above standards and certifications, you as a company can be sure that an Indian IT or R&D team is providing your solutions with European quality. 

4. Communication is the key to success

Even though your IT or R&D team operates remotely, this does not affect smooth communication with the European headquarters. Not only because online conferencing is fully established by the corona crisis, but also because English is one of the main languages in India. India is the largest English-speaking country in the world. Good communication is essential for a successful start in India. For example, the the German IT company Optanium has not seen a single employee from its R&D team leave in seven years because of the strong bond of trust the German parent company has been able to build remotely with its employees in India.

5. Use the time difference to your advantage

India is 4.5 hours ahead of Europe, allowing you to solve problems before they will affect your European employees or users. This leads to greater efficiency, higher productivity and more space to focus on crucial tasks. Dutch company ARS Traffic & Transport Technology, a leading market player in technological traffic solutions, has had an R&D facility in India for twenty years for this reason. In addition to software development, the section control systems and matrix signs along Dutch highways are controlled from the Indian ARS T&TT office. "If a system fails, due to the time difference, we can repair the system before rush hour starts," told CEO Jan Linssen told us earlier at an interview.

6. Support from the Government of India

The IT industry is one of the largest sectors of the Indian economy and employs the majority of India's young workforce. The Indian government has therefore designed its policies to give this industry room to grow. With initiatives such as Digital India, which aims to make the country digitally more powerful in the field of technology, the government is trying to stimulate foreign investment in this sector even more. Therefore, you will have little trouble with legal or fiscal restrictions. 

Jump into the new, hybrid way of working - this is the time to outsource:

Many companies are trying to find their way in the post-pandemic world, which brings both financial and work-related challenges. Cutting your IT budget is actually impossible in this era of hybrid working, which is why outsourcing internal IT is a solution that can save companies a lot of money. With our new ways of working, physical distance is no longer a major obstacle to working with a remote IT team.

Wondering what benefits outsourcing has for your business? Get in touch with us:

These are the four most popular locations to set up a remote IT team in 2022

It is currently difficult for European companies to find good IT professionals, engineers, data specialists and other technical staff. For years, companies have been looking across borders for solutions in the form of a remote team or outsourcing. But what is the best destination for setting up such a remote team? Where can you find a large pool of highly educated people who speak English well? We take a closer look at four popular destinations: India, China, Argentina and Poland.

India has more tech talent than Silicon Valley

The Indian talent pool

According to a study by Price Waterhouse Coopers, India is not only the largest IT hub in the world, but cities such as Bangalore and Pune attract more tech talent than Sillicon Valley. India has one of the largest and most educated talent pools in the world. Around one and a half million students enter the country's technical universities every year, and they are not the least of these. In fact, six of the seven Indian universities with a QS World University Ranking are technical universities. According to research by Gild , Indian developers scored as much as 11% better than their American counterparts on maths and mathematics assessments. Indians also speak excellent English, the country's second official language. 

The Indian IT market 

India is the country with the most ISO-9000 certified software companies in the world. ISO stands for International Standard Organisation and the certificate guarantees the quality of software design, development, production and installation. In addition, over 75 per cent of the global CMMI Level 5 certified IT companies are located in India. The CMMI is a scale that indicates the level of software development of an organisation. The model distinguishes five levels, of which 1 is poorly developed and at 5 the development process runs like a well-oiled machine. With about 67% of the global market, India is the world's largest outsourcing destination for the IT industry. India's outsourcing market currently employs around 5 million developers who specialise in app development, both native and hybrid, the Python, Java, JavaScript, C/C++ and PHP programming languages and the country is rapidly developing machine learning, AI, GIS and blockchain technologies.

The advantage of outsourcing to India

By outsourcing your IT or R&D to India, you can not only make significant cost savings of 50-80%, but you can also use the 4.5 hour time difference (3.5 in summer) to your advantage. For example, by solving problems before your European employees or users are affected. For this reason, ARS Traffic & Transport Technology in The Hague, a leading player in technological traffic solutions, has had an R&D facility in India for the past twenty years. In addition to software development, the section control systems and matrix signs along Dutch motorways are monitored from the Indian ARS T&TT office. "If a system breaks down, due to the time difference, we can repair the system before the rush hour starts," CEO Jan Linssen told us. 

China invests to become a major tech destination

The Chinese talent pool

The Chinese government has been investing in improving the country's tech sector for several years now and it seems to be paying off. China is not only the birthplace of big tech companies such as Huawei, Alibaba and ByteDance, the parent company of the app TikTok, but is now also ranked 14th in the Global Innovation Index. This is an annual ranking that ranks 126 countries based on their ability to innovate. Science and maths are also major focus areas in Chinese schools and universities, resulting in some 5 million IT students graduating each year. Because technology is a relatively new focus of the Chinese government, the IT sector is still very young. About 57 percent of the Chinese developers have only one to three years of working experience. This makes them a lot less experienced than their international colleagues, where half of them have four to ten years of experience. 

The Chinese IT market

According to experts, the Chinese IT sector is highly fragmented. There are few large IT companies and the small companies all focus on the domestic market. This is partly because Chinese developers often speak little or no English. China is now mainly concerned with product development and low-end, relatively uncomplicated IT applications. Although the IT products developed in China are simpler, the price is not extremely low anymore. On average, a cost reduction of 40% can be expected. One of the biggest obstacles for foreign companies wishing to outsource to China is the lack of intellectual property protection. Although the government is already working hard to crack down on piracy and other forms of intellectual property infringement. Chinese developers generally excel at functional programming and the Python and Shell script programming languages.

Argentina is the number one outsourcing location for US companies

The Argentine talent pool

Over the past 20 years, Argentina has invested heavily in technical higher education, with some 90,000 students now leaving university each year with a technical diploma. In recent years, several Argentine universities have appeared in prestigious international rankings, including QS, the Center for World University Rankings (CWUR) and Times World University Ranking. As a result, Argentina's talent pool has grown to around 135,000 developers in a short period of time. According to the 2019 Global Skills Index by Coursera , Argentine developers are the best software engineers in the world. They also speak the best English in all of Latin America. The cost savings that outsourcing to Argentina could bring you depends on the erratic economy. At the moment, the country is relatively cheap and would be around 40 percent, but in good times it would be more like 20. 

The Argentine IT market

Despite Argentina's faltering economy, the country's IT sector has been showing strong growth of around 3 to 5 per cent per year for a decade. This is partly because the Argentine government made the growth of this sector a priority back in 2004 by introducing the Ley de promoción de la industria del software. This law made the sector completely free of restrictions on foreign investment, making software development the most important source of foreign investment, up to 58 per cent, in Argentina. Argentina's IT sector comprises about 3,800 companies, including big names such as IBM, Intel, Motorola, Microsoft, Oracle, Siemens, and Gameloft. It is the number one outsourcing destination for companies from the United States due to the zero time difference. The difference with Europe is quite significant, with the Netherlands running four hours ahead. Outsourcing companies in Argentina specialise in app development, open source projects, cloud computing, Magento, PhP and DevOps. 60 percent of the IT companies are ISO9001 certified.

Poland is the Finech location of the European Union

The Polish talent pool

The best universities in Poland are four technical universities, and some 140 000 technical students graduate there every year. IT courses in the country are very popular not only among Polish but also among international students due to their high level and low cost. The IT industry in Poland has about 300,000 developers, but 80 per cent of them work in the R&D offices of tech giants such as Motorola, IBM and Shell. Poland is in fact known as the R&D hub of Europe. Only 20 percent of Polish developers are therefore available for outsourcing projects. Poland has no time difference and no major cultural differences with most Western European countries, so the prices are at a European level. The cost savings from outsourcing IT or R&D will be around 20-30 percent.

The Polish IT market

The Polish IT market is growing at a steady pace. In 2019, the sector grew by about 2.9 per cent and revenues increased by 4.6 per cent. This makes the IT industry account for about 8 percent of Poland's GDP. In addition to the many large multinationals that have established their R&D in Poland, the country is also known as a good location for FinTech projects. Developing such projects requires experience to make them bug-free and, more importantly, safe for users. Polish developers are experts in this field. Poland is the largest FinTech market in the European Union with an estimated value of €856 million. Because Poland is a member of the EU, it follows European privacy and intellectual property laws. This can give European companies a huge advantage when they want to start a web development project. Front-end and back-end development is therefore a much sought-after service by European companies. Polish developers are also known for their specialisation in PHP, Java and .NET. 

This is the time to outsource

All four locations have their advantages and disadvantages, but one thing is clear. Since the outbreak of the pandemic, we have faced a major challenge worldwide. Companies have suffered a severe financial blow, but at the same time the need for digital solutions for customers and employees has increased. Cutting your IT budget is impossible in today's digital world, which is why outsourcing internal IT is a solution that can save a lot of money. Wondering how outsourcing to India will benefit your business? 

Indian R&D division worth gold to NXP Semiconductors

Chip producer from Brabant, NXP, has grown into one of the largest chip producers in the world with a turnover of 11.1 billion dollars. “NXP’s operation in India plays a big part in that”, says Vice President of NXP, Sanjay Gupta. “We have 650 patents to our name.” 

Sanjay Gupta (in blue) during the NXP India Mentorship Program

Largest R&D hub 

NXP has 4 R&D offices in India. More than 3000 people work there in total. The various locations focus on specific markets. In Noida, near capital Delhi, they design hardware and software used in the next generation of microcontrollers and microprocessors for the automotive and edge computing industries, in Bengaluru they focus on the IoT and security markets, in Pune on connectivity solutions and in Hyderabad on software solutions for the communications and infrastructure market. "India is NXP's largest R&D hub," Gupta says. "And is also considered one of the most innovative hubs. We have so far been able to add more than 650 patents from India to NXP's already impressive list of patent families." This, according to Gupta, once again underlines the quality of Indian engineers.

Business culture in India

Gupta himself was an engineer from a leading university in India. "Twenty-six years ago, as a recent graduate, I was offered a job with this great organisation. I was fortunate to have multiple opportunities to grow and excel within this global company and was guided and supported by the management of NXP every step of the way, from one challenging role to another. In 2016, I was given the most challenging opportunity to lead NXP India, while the company merged with US semiconductor maker Freescale. Examples like my career within NXP are a huge motivator for our people: they know that truly everyone has the opportunity to develop within the company." 

NXP's Senior Leadership Team is actively working to create a family culture across all sites. "This is also good for the business," says Gupta. "Despite the fact that our teams in India are literally miles apart and focus on different products and markets, we encourage collaboration between departments as much as possible. We find that when we bring different disciplines together, they learn incredibly well from each other and often come up with new ideas or solutions for their own segment."

Ease of doing business

According to the India vice-president, companies who are still unsure whether India is the right location for their R&D department should make a move now. "There is a lot of talent in India and you don't have to worry as a company about the quality they can deliver. Moreover, doing business in India is becoming easier; just look at the enormous leap India has made in the past five years on the World Bank's Ease of Doing Business list. In addition, the government is investing heavily in the development of industries such as manufacturing and the chip industry. No wonder India is becoming increasingly popular with foreign investors."

Read more about the benefits of outsourcing your R&D to India and why now is the right time:

Tax benefits

The Indian government has announced in the 2022 budget to extend the tax benefits applicable to international companies setting up a manufacturing plant in India. In addition, major investments will be made in the chip industry, the automotive industry and infrastructure. According to Gupta, this offers interesting opportunities for European companies. "If you want to successfully enter the market in India, you need a long-term vision. Therefore, you should not only consider setting up your R&D here, but also explore the production possibilities. That way you can take advantage of the current incentives and be agile and prepared to respond to the rapid developments in Indian society."

Competition increases

Gupta is not worried about the potential competition for NXP now coming to India due to the favourable business environment. "First of all, I think competition is healthy for any company because it makes you more focused and efficient. In addition, we at NXP are so versatile, we work with talented people and the markets in which we operate are developing so rapidly that I expect us to increase our sales significantly in the next five years. Take for example the automotive industry, one of our key markets. We are currently working on exciting innovations and solutions for electric vehicles, infotainment & connected cars and autonomous vehicles, with a focus on improving the customer experience. This sector will continue to evolve in the coming years."

India is at a turning point

The MD admits that these advanced technologies may not yet be 100 per cent suited to the current needs of the Indian consumer. "But make no mistake, India has a population of over 1.4 billion, half of whom are under 35 years of age. This rapidly developing country has a growing middle class and rising income levels, creating huge business opportunities for international companies if they dare to seize the chance to invest in India and be part of this journey. India is known for embracing new technologies and solutions at an exponential rate, once they are at an affordable level. For instance, India is the largest two-wheeler country in the world. Every year, more than 20 million motorbikes and scooters are produced for the Indian market. The number of Internet users is also a good example. It has increased by 800 per cent in 10 years. Paying or shopping online was very unusual just a few years ago and now it has become commonplace. India is at an interesting turning point that companies should take advantage of." 

Market entry workshop

To become truly successful in India and take advantage of the opportunities described by Sanjay Gupta, a solid market entry strategy is required. India is a market that requires a long view and a good understanding of local needs and preferences. To make sure you start with the right strategy, IndiaConnected has set up a special Market Entry Workshop.

In 2 hours you will discuss your strategy with our experts and the following topics will be covered:

• Get a better understanding of what is involved in your market entry in India.

• Receive valuable feedback on your current India strategy from independent experts.

• Expertise in every field: sales, manufacturing, legal, tax, finance, supply chain, recruitment, etc.

Request a quote from us now.