While other low-cost destinations are slowly catching up with India in the outsourcing arena, the country will retain its edge due to the growing influence and expertise of the Indian Diaspora, especially in the USA, Canada and the UK.
This is primarily on account of the rise in organized networking and mentoring that the Diaspora community can provide to businesses engaged in outsourcing. This was the finding of a study conducted by Evalueserve and World Bank Institute.
According to the study, by the 1990s, many Indian engineers, who had started moving to the US in the 1960s, had either become entrepreneurs, venture capitalists, or senior executives in large and medium-sized companies. Many of these professionals started their own companies in India (e.g., Techspan, Cognizant, Mphasis), while others convinced their companies to hire Indian IT professionals. This provided more visibility to the Indian talent pool and resulted in the strengthening of the Diaspora.
Riding the wave of this growing reputation in the IT sector, many well-placed senior executives in big corporations influenced outsourcing related decisions in India’s favour. Some of these relationships quickly matured, leading to the formation of non-profit associations such as The Indus Entrepreneurs (TiE) and Silicon India Professional Association (SIPA), which further fuelled the networking within the Diaspora.
Apart from providing the required capital (through investments), the Indian Diaspora is expected to increasingly play a crucial role in the gradual emergence of India’s high-end knowledge services sector. First, it is expected that the Diaspora will provide more organized platforms for the sharing of knowledge and best practices. Next, the Diaspora is expected to increase the brand equity of the Indian industry, but without giving a semblance of bias for their home country over other low-wage destinations.
Additionally, some VCs in the US, particularly those of Indian origin are actively funding Indian companies that have back-end operations in India, so that they can save on research and development costs. It is estimated that over 150 start-ups in the US already have some form of back-end in India (as of March 2004) and this number is likely to double by March 2006.
Finally, several networking organizations like TiE (The Indus Entrepreneur), AAPI (American Association of Physicians from India), AAHOA (American Asian Hotel Owners’ Association), AACSA (American Asian Convenient Stores Association) are helping the Indian Diaspora and the entrepreneur community in India to bond stronger.