How to Outsource Work to India: A Complete Guide

January 24, 2024
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Different hiring trends are observed worldwide as we experience economic uncertainties coexisting with technological advancements. 2022-23 saw another wave of layoffs among several tech companies, with 4.25 lakh employees losing their jobs. However, it brings a brighter prospect for outsourcing work to India. Known for its high-quality talent, experts predicted that 30-40% of the layoff jobs could be offered to an Indian workforce. 

India produces one of the most STEM graduates globally due to its high population rate. With access to the internet, good-quality education, cheaper labour costs and English as a dominant language, the Indian workforce has the potential to attract foreign recruiters to offshore their requirements to a resourceful distributed workforce in India. 

Are you looking to hire Indian workers but unsure how to outsource work to India? You’ve reached the right place, as we give you a complete guide. 

Why Do Companies Outsource to India?

What makes India a magnet for hiring IT talent for several foreign companies? Some of the reasons why companies continue outsourcing work to India are: 

  1. It is Cost-Effective

A sizeable difference exists between the salaries of a US and Indian developer working on the same task. A software developer in the US has an hourly rate of $46/hr. However, the rate for an Indian developer ranges between $18-40, depending on their experience. 

With the availability of good-quality talent at a much lower cost, companies look forward to hiring developers from India

  1. Access to Skilled Talent

A Gartner survey from late 2021 revealed that 75% of IT executives cited talent shortage as the biggest barrier to adopting new technologies. However, the picture transforms when it's about outsourcing work to India, which has a 36% digitally skilled workforce

Nasscom states India also ranks first in AI skills penetration and the demand for professionals in India is estimated to cross 1 million by 2026. This creates a positive sentiment among foreign companies to seek advantage of India’s vast talent pool. 

  1. English Proficiency

Although English is not the first language for many citizens, it is one of the official languages of India. About 88% of the Indian population in urban areas can read and speak English. 

With a basic understanding of English, it is easier for US-based employers to communicate with their Indian team members. Language and script are not a bigger barrier than other countries. 

  1. Time Zone Benefits

Outsourcing work to India enables a 24x7 operational facility. There is a 12-hour difference between India and the USA, which means your work won’t stop even though your work hours do. The product development cycles can be faster because the Indian team members can continue the tasks in their regular workday of 9-5.  

Many companies also outsource their back office processes to India to deliver 24x7 availability to their clients. 

  1. Technology and Infrastructure Access

As India inches forward among the world's top economies, it has visionary plans to develop its digital infrastructure. A pan-India 5G rollout in 2023 will further accelerate this digital transformation. 

A report states at least 20% of Forbes 2000 global companies have set up their Global Capability Centers in India till 2023, and this share is estimated to grow to up to 55% by 2030. These help drive innovation and develop emerging technologies. 

Access to the latest technology and 5G internet support ensures a smooth workflow when outsourcing work to India. 

How to Outsource Work to India?

The main question may arise about the outsourcing process and the formalities involved in reaching out, finding new talent, recruiting and onboarding. How to outsource work from USA to India? Here are some steps to follow: 

Identify Your Needs 

Ask yourself the following questions:

  • Do I need to establish my own subsidiary or seek third-party support?
  • Do I need full-time employees or independent contractors?
  • How many employees do I need to hire? 
  • What is my budget for outsourcing tasks? 
  • What are my expectations from the outsourcing partner? 

Once you conduct this basic research on your end, you can frame relevant job descriptions and search for candidates. 

Analyse Compliance Requirements 

While hiring from India is attractive, one must navigate its complex labour laws. If you are hiring full-time employees, you will need to consider the regulatory compliance requirements in the country. Some of these are:

  • Framing a formal employment contract
  • Minimum wages
  • Maintaining a payroll cycle 
  • Overtime pay
  • Local benefits and insurance 
  • Any other licenses and certifications (depending on industry) 

Search for Potential Outsourcing Partners 

India, being a top hub for outsourcing, has no shortage of outsourcing companies. While some may only take care of HR administration, others can offer end-to-end services. 

Begin your search for outsourcing partners that tick off all your needs. Request quotes and see if they fit your budget. 

Partnering with an employer of record (EOR) is another option you can rely on. They will be a legal employer on your company’s behalf and can handle all HR administrative tasks. 

Finalise and Start Collaborating 

Once you find the right outsourcing partner, finalise the contract and start collaborating. On your end, ensure you share all your requirements with a turnaround time so they can work on them accordingly. 

How Do You Choose an Outsourcing Partner?

All your answers on how to outsource work to India will be simplified if you choose the right outsourcing service provider. Past instances highlight tech giants like Microsoft and Amazon falling prey to fraudulent tech support scams in India. It is thus essential to have a credible outsourcing partner who can set up trusted support systems for your company in India. 

Here are some things to consider before choosing your outsourcing partner: 

  1. Services offered: Confirm what services are offered by the company. Other than the regular HR administrative tasks, ensure that they also have payroll support. Find out if the company handles local employee benefits and legal compliance.

Check if they provide relocation and visa processing in case your employee has to move/travel for work. Or do they have local partnerships to provide workspace for your remote teams?

Some outsourcing organisations also have their own recruitment programs, which can make hiring candidates easier. Make sure the services you require align with the available offerings.

  1. Package cost: Most companies have a designed package that covers all the services. Either per employee or a fixed number of employees will be recruited at a specified cost. Check if the package is worth the services offered and analyse if it is within your budget.

  2. Client portfolio: There are numerous outsourcing partners in India, but search for the ones who have worked within the IT industry. When the company has worked with clients like yours, they will have a better understanding and experience in catering to your needs.

So, research their client portfolio and ask related questions to understand their work experience better.

  1. Reviews: In today’s age, when everything is posted online, find and check reviews of the company you plan to partner with. Reviews highlight the pros and cons of a particular company and can help you finalise your decision. 

Things to Know Before You Outsource Work to India 

The high-quality talent and lower labour costs are definitely attractive to hiring teams in India. But here are some things every US company should be mindful of. 

Cultural Differences

India is a diverse country with a diverse cultural landscape. When recruiting Indian teams, ensure the local festivities and celebrations are respected. Acquaint with days of cultural significance in the country to incorporate them into your corporate calendar. 

Work Ethics

Indian business ethics vary a bit from other Western countries. Hierarchy is important in decision-making and there is a negotiator approach in matters of financial transactions. It is crucial to understand these nuances where mutual respect is dominant. 

Compliance 

The regulatory compliance requirements can differ from one state to another. Employee engagement has to be formalised with a contract that specifies the role, salary, working hours and expectations. It should also lay out the employee benefits and number of leaves an employee is entitled to.

Full-time employees have to serve a 30-day notice period when they leave/are terminated. Having local expertise to simplify all these compliances for you is always helpful. 

Payment Cycle 

India follows a monthly payment cycle. The company can decide the dates for the payment. The payment terms can vary if you appoint freelancers and independent contractors. 

Labour Laws

Indian labour laws are designed to protect workers' rights, ensure fair employment practices and maintain harmonious employer-employee relations. It focuses on 4 core elements: work contracts, employee rights, social security and benefits and termination.

These laws are different in special economic zones, states and union territories. Navigating these on your own can be confounding and non-compliance can attract penalties. 

Choose Rapid For Your Outsourcing Needs

If you are wondering how to outsource work from the USA to India, Rapid is a reliable partner. With more than 20 years of expertise in the Indian market, we can assist in recruiting a skilled remote team while ensuring adherence to all local regulatory requirements.

Rapid is adept at staying updated with constantly evolving global regulations, an essential factor for tech companies to remain compliant and avoid legal obstacles in India's varied legal environment.

We offer an all-encompassing solution for US tech companies aiming to tap into India's vast pool of highly proficient IT professionals. Our specialists are poised to transform the intricate task of distributed workforce management into a seamless and efficient process, especially in the context of outsourcing to India.

Click here to book a demo today. 

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