India has been a prominent destination for outsourcing due to its enormous pool of talent and growth prospects. It stands tall among the major outsourcing nations including China, Philippines and Thailand. As per Statista, India has remained a leading player for years in various outsourcing market domains including IT and business processing. In this blog, we’ll highlight how India gained a competitive edge over its competitors in this space. What might be the future prospects of outsourcing market in India?
Understanding Outsourcing
Outsourcing refers to a practice in which certain services, functions, tasks or duties are assigned to a third party on contract basis. This approach offers significant advantages such as increased efficiency, variable capacity, greater flexibility, and sharp focus on core business strategies, among others. Outsourcing is geographically divided into three parts, onshore (within your own country), nearshore (in the neighborhood) and offshore (from a distant land).
Advantages of Outsourcing from India
India has established itself as the dominant force in the outsourcing market owing to the various factors. The outsourcing market in India is growing rapidly and is likely to maintain its growth rate in the coming years. Here are some of the specific factors which are making India as a top preference for outsourcing:
Low Labor Costs : Labor cost is indeed a significant factor which impacts your overall operational budget. Lower rate of labor in the outsourcing market of India saves big on your business. The highly skilled workforce of the country comes at 70% lesser costs compared to the western counterparts.
Infrastructure and Technology : The state-of-art infrastructure of India, high-speed internet services, high-end software solutions, tech-friendly population, and well-developed cities like Bangalore, Mumbai, and Delhi, among others, render a higher outsourcing success.
Access to the Skilled Talent : The young and highly talented population of India provides an upper hand in the outsourcing business. India adds 2.5 million graduates and certification holders through its colleges and universities annually. In addition, the country has well-established training and management programs, offering an unparalleled outsourcing support. Moreover, India boasts diverse skilled labor ecosystem ranging from accounting and tax compliance to technological and administrative support
Key Industries for Outsourcing in India
The future of the Indian outsourcing market remains positive and potent. Outsourcing of services in the following sectors have witnessed a meteoric rise:
IT Sector
IT outsourcing market in India is expected to grow at a CAGR of 13.09% from 2025 to 2029, to attain a market volume of $20.81 bn by 2029. The United States of America is the largest revenue generator for IT outsourcing in India. (Source).
The enormous wave of AI, machine learning and deep learning which has taken the world by a storm, is further influencing the IT infrastructure of India positively. This has expanded the application of automated IT systems.
Constant innovations, technological advancements and the robust educational system producing millions of engineers annually, serve as the backbone of the Indian IT outsourcing market.
Business Process Outsourcing
The business process outsourcing market in India is expected to grow at a CAGR of 8.33% from 2025 to 2029, attaining a market volume of $10.94 bn by 2029. The healthy growth of this segment can be attributed to the skilled workforce and cost advantages offered by Indian policies.
Low cost of labor, access to talented professionals and rising investments by the major vendors such as HCL Technologies, Infosys, and Accenture, among others are boosting the market growth.
In the future, the market growth is likely to be triggered by factors such as the increasing number of e-commerce platforms and rising demand for BPO services in diverse sectors including healthcare and retail.
Book keeping and Tax Services:
The global accounting services market attained a value of $604.2 billion in 2023. India accounted for 37% of this expansion. The growth of this market is driven by the increasing demand for bookkeeping and tax services from small and medium enterprises from North America and Europe.
Favorable initiatives of the Indian government, such as the Digital India campaign, have revolutionized the approach towards accounting services. Stringent compliance and regulatory frameworks in the country have improved the response rate to data breaches, rendering a higher market growth.
Advanced technologies have cut the processing costs associated with bookkeeping and tax services by 30%. Enhancements of AI capabilities, cloud-based collaboration, real-time reporting, and live collaboration features, among others are some of the tech-driven advancements augmenting bookkeeping and tax services.
The outsourcing services market in India is promising and positive. Outsourcing infrastructure is set to witness advancements, attracting investments. Indian outsourcing provides a pool of talent at lower costs, providing a financial upper hand to your business. Smartcall stands tall in the outsourcing business offering cutting-edge technological solutions and business process outsourcing services. Partner with us today to charge your business strategies— Click here.
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