Outsourcing is moving back to Europe: Why and What to Expect?


India is the biggest outsourcing destination for both the US and European businesses. Europe accounts for about 30% of India’s $150 billion outsourcing industry.

However, due to updated regulations on data protection (GDPR), the global pandemic, and some economic changes in India, many companies are ready to bring outsourced customer service back to Europe.

Therefore, in this article, we’ll discuss this shift in more detail.

Why is India so attractive as an outsourcing country?

Before going further, let’s quickly recap why outsourcing services from India is so appealing.

The following are the most common reasons:

  1. Low prices. Despite increasing wages (we’ll discuss that in the following paragraph), India is still offering low rates and prices for their services.
  2. Human resources. As a country with 1.3 billion people, India offers human resources that only a few other countries have.
  3. Adaptability. India’s market is prompt to adapt quickly to the demands of the other countries. That includes training needed specialists and adapting the software to suit clients’ needs.

However, the situation is not here to stay due to some economic changes in the country.

India is no longer as cheap for outsourcing as it used to be

There is no secret that the biggest appeal to outsource specialists from India was cost-effectiveness. However, the situation is changing.

In recent years, the wages in India have been rising, which already forced some companies to move back home.

In the summer of 2020, it was estimated that, on average, India’s wages would rise to 13% in the upcoming year. Add one of the biggest inflation rates of the big Asia economies, and there you have more reasons for outsourcing to leave the country.

Downsides of outsourcing from India

We’ve already covered the financial part. Let’s review some of the other reasons why outsourcing from India may not be as great as it may look.

Time difference

In business, time is everything. Therefore, having one or a few departments of your business in another time zone can be tricky and cause challenges.

To avoid that, moving to outsource back to Europe may be a good alternative.

Communication issues

Each country has its understanding of business and communication.

When they are somewhat or a lot different, that can cause challenges to the end product or service, and overall user experience, and, in some cases, income earned.

Additional Covid-19 related challenges

Another thing that may add up to the outsourcing movie back to Europe faster is the global pandemic.

Outsourcing, just like many other fields, has also been affected by the Covid-19 pandemic. As the current situation in India is extremely difficult, additional challenges are posed to the outsourcing field.

For instance, the most prominent issue is providing employees with technical gear to use at home as working at the offices is too dangerous.

Bottom line

Altogether, outsourcing is finding its way back to Europe.

Due to challenges globally and in India, more and more companies are opting to find reliable outsourcing services at home.

The shift will take time, but we can already start seeing some changes.