Majority of Urban Indians Unaware of Outsourcing

GALLUP NEWS SERVICE

PRINCETON, NJ -- According to a recent Gallup survey conducted in India, only one in five Indians living in urban areas have heard or read about the phenomenon of outsourcing. Considering that India's urban population represents about 25% of the country's total population, or roughly the size of the United States, this can either be seen as an opportunity for entrepreneurs in India or as a threat to countries exporting jobs overseas.

While the Gallup World Poll conducted surveys across all of India in January and February 2006, this analysis focuses on respondents living in urban India, and is based on a representative sample of 1,500 face-to-face surveys in parts of the country defined as metro areas or towns with a population of more than 25,000.

U.S. companies outsourcing jobs to countries overseas is a hot topic, one that received significant political play during the 2004 presidential election campaign. At that time, the U.S. Bureau of Labor Statistics reported that only 4,633 private-sector jobs in companies with more than 50 employees were lost during the first three months of 2004. A report by Dr. Kate Bronfenbrenner and Dr. Stephanie Luce challenged the Bureau's estimates, putting the number of outsourced jobs closer to 48,417 during that same time frame.

An online monitor called the Offshore Tracker, developed by the Washington Alliance for Technology Workers, currently shows that since January 2000, close to 500,000 technology jobs have been outsourced. Although it does not provide estimates by recipient country, it is fair to say a sizeable number of these technology jobs would have gone to India.

Previous Gallup polling shows that Americans are concerned about the outsourcing of jobs to other countries. The Gallup World Poll surveyed Indians about how they view this phenomenon, and about what future potential Indians see for their country in the outsourcing market.

One would have thought that the backlash from countries losing these jobs would have made the issue of outsourcing very salient, at least among the urban population where most of these outsourced jobs reside. However, the survey shows that only 20% of urban Indians have ever heard of or read about the terms outsourcing, business process outsourcing (BPO), or knowledge process outsourcing (KPO). Indians would be more likely to recognize the latter two acronyms, which are more common when describing the work that is brought in from overseas.

Have you read or heard about any of the following: Outsourcing, BPO (Business Process Outsourcing), KPO (Knowledge Process Outsourcing)?

A majority of urban residents (79%) either say they are not familiar with any of the terms or simply don't know. There are some regional differences; Indians living in the West are more likely than those in the South to say they have heard about outsourcing, 38% to 19%.

Awareness is limited even among the "Generation Y" population (15- to 24-year-olds), the so-called beneficiaries of these white collar service jobs in call centers. Among those who are currently employed, the awareness figures are only slightly higher.

A majority of urban Indians who say they have heard about outsourcing, BPO, or KPO agree that India's competitive advantage can be attributed to the availability of a large supply of possible workers who are proficient in technical and English language skills, as well as the low cost of providing these services.

India will continue to have a competitive advantage in outsourcing because of an abundant supply of people with technical and English language skills. (Base: Those familiar with outsourcing.)

Cost of providing outsourced services will continue to remain cheap providing Indian companies a competitive advantage. (Base: Those familiar with outsourcing.)

Two-thirds of 25- to 44-year-old urban Indians -- those in "Generation X" - who are familiar with outsourcing agree that India will continue to have a competitive outsourcing advantage because of abundance of skill; they are the people most likely to be the incubators of these jobs in the form of new startups. An increase in the density of these jobs in the South, and the resulting resource crunch, perhaps is the reason that a smaller percentage of Indians living in the South (32%) agree, compared to urban Indians total.

About 4 in 10 say that the kinds of jobs that are outsourced to India do not lend themselves to the creation of higher value, and in the long run they anticipate this work will go away once the cost competitiveness disappears.

Only the lower end of the work is coming to India and does not add a lot of value to the services provided. (Base: Those familiar with outsourcing.)

Outsourcing is a fad that will disappear once companies stop seeing any major cost advantages. (Base: Those familiar with outsourcing.)

Countries continue to send jobs overseas, and they are not just sending low-end service jobs; companies are outsourcing jobs that are higher in the value creation chain such as research and development in automotive design, bio-technology, pharmaceuticals, and even precision manufacturing.

For India to reap the benefits of outsourcing, two things need to happen. First, India must deepen its pool of high quality resources in areas of opportunity, through both investments in education as well as structural labor reforms. Second, political and business leadership in India have to reinforce the benefits from outsourcing in the form of value being created to companies from where the jobs originate both in terms of intellectual property as well as lower costs.

Survey Methods

Results are based on face-to-face interviews with a representative urban sample of 1,500 residents of India, aged 15 and older, conducted Jan. 3-Feb. 15, 2006. Respondents were interviewed in 44 metros/towns across the country. Interviews were conducted in English, Hindi, Marathi, Gujarati, Kannada, Tamil, Telugu, and Bengali. Households were selected at random, and respondents within households were chosen at random according to Kish tables.

For results based on these samples, one can say with 95% confidence that the maximum error attributable to sampling, weighting and other random effects is ±3 percentage points. In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.