Possiblities and Benefits

There are many benefits to outsourcing for IT companies. The main benefit, of course, is that outsourcing saves money. The reason this happens is labor in countries like India and China is much cheaper than it is locally in the United States. Knowing this, many IT firms outsource tasks such as computer support and maintenance, to a third party. Another big advantage of outsourcing is that an employer can tap into a new market of employees, and may find more qualified workers. Not only would the workers be more qualified or specialized compared to local employees, but also they would typically have a lower rate of pay than local employees. These two benefits are enough for many businesses to outsource jobs. One other benefit that is often overlooked is the fact that it is much easier to fire or let go an employee that is thousands of miles away. The relationship with employees across the world is much less personal, and therefore employees are more willing to fire unproductive or inefficient employees in India then someone in the same building as themselves.
IBM, as stated in the introduction, benefited greatly from outsourcing. The number of employees in India has grown more than 25,000 within the past three years, and shows no sign of stopping. Other companies have followed IBM, hoping to reap the same benefits that IBM saw. One company that is currently considering outsourcing more jobs is NTT Data Corp. Their objective is to become one of the top five IT firms in the world, and Takashi Enomoto said, “India is a very important part of our plan to achieve that” (Lison, 2010). NTT is currently ranked in the top 10 of IT firms. Currently, NTT has 34,000 employees, with 5,000 overseas, the majority of which are in China. In June 2010, NTT acquired the company Intelligroup, giving them 2,600 additional employees in India. Enomoto hopes that with these additional employees, they will grow to be a powerhouse in the industry like IBM.
This will certainly be no easy task, and take a great deal of time, especially considering NTT’s current net profit margin of 7%, compared to IBM’s 17% (Lison, 2010). However, outsourcing in India should certainly help them increase this profit margin, and grow in the IT market.