eThesis - School of Business electronic theses

This thesis examines recruitment challenges in IT offshore outsourcing work in India. Offshore outsourcing means transferring part of a company's work to be done outside of both organizational as well as national borders, usually to a geographically distant country. This business practice became popular in the end of last century, enabled by developments in for example technology, finance, and politics. Specifically in IT field its adoption was facilitated by the increased modularization of IT processes that allowed separating part of them for outsourcing.

India rose as the most interesting offshore outsourcing country especially in the IT field due to its vast population of educated working-age people, English skills, and IT competence. These, together with the fact that the cost of an Indian employee was just a fraction of a Western one, rapidly made companies to look for cost savings through offshore outsourcing in India. As a result, major Western IT consultancy companies have had to set up offshore units in India in order to respond to the increasing demands of their customer companies.

Offshore outsourcing offers enticing opportunities also in other than cost-related terms, but involves great risks related to for example companies' readiness for offshore outsourcing and cultural differences. This makes management decision-making in the area complicated. Yet offshore outsourcing has become part of strategy for most big Western companies. Offshore utilization also helps major IT consultancy companies in becoming more profitable, but on the other hand managing work offshore so that the expectations of customer companies are met is challenging.

Human resources are the foundation of offshore outsourcing as its benefits are based on the redundant supply, low cost, and other properties of these resources. In professional work like consultancy people are in an important role in ensuring the success of work and in managing knowledge and expertise, the most important assets of many companies. Despite India's suitability for IT offshore outsourcing, there are signals indicating that it has recently become increasingly difficult to recruit the right kind of human resources there, and poor education seems to be a major reason for this.

Supported by a series of semi-structured interviews, this thesis aims at finding out where these difficulties stem from. Based on the results, no specific time for when these challenges became drastic could be determined, but it is suggested that in addition to ineligible education, they are caused by fierce competition between companies, Indians' hungriness to proceed in their careers, and companies' recruitment processes poorly fitting the Indian business environment. As offshore outsourcing field is very dynamic, it is hard to estimate how the situation will develop.