Niche Outsourcing To India Leads To Higher Margins

Recently, churches in Kerala were holding prayers outsourced from U.S. churches, i.e mass was conducted by Indian churches in exchange for a fee. This might sound bizarre but outsourcing now includes a variety of functions and much more than just simple voice based outsourcing that began as call centers.

In fact, Indian firms are doing high value outsourcing for companies around the world. According to 2010 statistics on outsourcing in India, most firms involved in offshoring are software developing firms, seo firms, or web design companies. But that outsourcing landscape appears to be changing. For instance, one company is known to work for racecar Formula One teams. The engine control unit collects a wide variety of data from sensors measuring tire temperature, steering control, suspension and car balance. The data is sent back to the racing company center for evaluation. The staff then scrutinize the information to come up with solutions and improvements with problems cited. And that is how racecar data is outsourced.

Raman Roy, chairman and managing director of Quatrro BPO Solutions, a company that deals in high end business process outsourcing in India said, “This is not only about labor arbitrage,” reports The Economic Times.

Additionally, Quattro also does risk assessment for various banks in the U.S. This includes fraud and risk for clients who use credit cards as well. This service is particularly relevant in the aftermath of the credit crisis that spilled over into the financial markets, causing a global recession. The staff are able to pick up deviations from historic data of clients to determine if there is fraud involved.

Roy says that prior to this, large processes were outsourced to India. But now, small incremental processes in the form of high-end work are offered to clients, and it pays three times as much as BPO contracts: “It is no more about replacing people,” he said.

Another company involved in high-end projects is inverter manufacturer Luminous, which does geo-spatial map making and photogrammetry for big engineering firms in the EU. The companies outsource infrastructure development, floodwater draining, flood zoning, and telecom network planning projects to Luminous.

Rakesh Malhotra, CEO of Luminous, “We analyze maps in a 3D environment. The data comes from the customer and since it is a multi-layered data, there is a lot of intelligence we can put into it.” He adds that the company makes at least eight times as much as regular outsourcing.

Although the costs are higher, the margins are also higher: “We have to recruit specialized engineers for this kind of work. The margins though are still higher,” says Malhotra.

Niche projects continue to be outsourced to India. “Once the customer realizes that you have got your act together and follow norms, high end work will follow. They have tasted the success of India. Now they are willing to listen,” Malhotra explains.