How Offshoring Helped India Become The 5th Largest Economy

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HOW OFFSHORING HELPED INDIA BECOME THE 5TH
LARGEST ECONOMY
One of the most well-liked and economically
significant sectors of the Indian economy has
been offshoring since Dr. Manmohan Singh, the
former finance minister of India, introduced
globalization to the nation through the Economic
Liberalization Plan. Due to the country's
enormous labor pool, government support, and low
costs, India's offshoring sector has seen
tremendous growth in the 20 years since
then. According to the latest figures released by
the International Monetary Fund, the Indian
economy has blazed past the UK to become the 5th
largest economy in the world. Additionally, this
year, the Indian economy is anticipated to expand
by more than 7. Indian stocks have recently had
a global-beating recovery, moving their weighting
into second place in the MSCI Emerging Markets
Index, only behind China's. The computations were
performed on the Bloomberg terminal using
historical exchange rates and the IMF database.
The magnitude of Indias growth can be felt when
one realizes that just a decade ago, India was
the eleventh-largest economy, while the UK was
the fifth-largest.
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Indias offshoring industry
Offshoring, also known as the migration of
production processes abroad, is a long-standing
phenomena, but in recent years it has taken on a
new dynamic as a result of the decline in the
cost of communication and transportation as well
as the rapid advancements in information
technology. This has made it easier to move
"conventional" manufacturing phases (also known
as "material offshore") and made it possible to
move immaterial processes, also known as service
offshoring. Businesses from a wide range of
economic sectors as well as new economic entities
have been a part of these transitions.
Offshoring, both tangible and intangible, has
grown in emerging nations during the past ten
years. Companies can benefit from the generally
inexpensive labor costs in developing nations
like India as a result of their involvement in
global production chains.
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How the service sector helps Indias economic
growth
A country's economic development is solely
determined by its business climate. The business
environment in the nation must be very supportive
of development in order to achieve higher levels
of economic development. India's services sector,
which in FY2122 provided 53 of India's Gross
Value Added at current prices, remained the
country's largest source of economic growth (as
per advance estimates). From Rs. 68.81 trillion
(US 1,005.30 billion) in FY16 to Rs. 101.47
trillion (US 1,439.48 billion) in FY20, India's
services sector GVA expanded at a CAGR of 11.43.
Trade, hotels, transportation, communication, and
services connected to broadcasting increased at a
CAGR of 10.98 between FY16 and FY20, while
financial, real estate, and professional services
increased at a CAGR of 11.68 (in Rs. terms) (in
Rs. terms). By 2025, it is anticipated that
India's market for IT and business services will
be worth US19.93 billion.
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Offshore Accounting in India
Today, there is a huge demand for
knowledge-intensive services since there is a
shortage of skilled labor in industrialized
nations. Geographical barriers have disappeared
as a result of globalization, making it simpler
for nations to access talent and resources from
all over the world. Additionally, universal
standardization has occurred in the areas of
finance and accounting. India has the benefit of
having many experts in the accounting field,
including chartered accountants and taxes
specialists. India is in a good position as a
result of all these considerations. Already,
several Fortune 500 businesses outsource their
activities to India. CPAs in other nations,
including the US, are overburdened with
laborious, monotonous tasks like payroll
accounting, bill processing, and bookkeeping. The
CPAs can concentrate their efforts on other
lucrative endeavors like investment, asset
management, and tax preparation by offshoring
these basic accounting tasks. These CPA firms now
send all of their low-skilled, high-volume work
to India, a country renowned for its trained
labor and effective business practices.
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Due to India's various benefits, more and more
nations are offshoring their accounting and
bookkeeping needs to India each year. As a
result, India's offshore accounting industry has
and will continue to grow in the upcoming years.
It is anticipated that the nation's share of the
worldwide KPO industry will double.
How offshorings growth has aided the Indian
economy
IT services provided the first impetus. With one
of the largest IT workforces in the world, India
offers a wide range of services to offshore
clients with locations in the US, the UK, and
other countries. Offshoring procedures in
accounting and finance are not new, though. The
accounting offshore companies in India benefited
greatly from the opportunities when the world
experienced a financial slump in the years
20072008. There is a sizable pool of accounting
experts in India with over 350,000 being
registered as chartered accountants.
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In addition, the nation is home to hundreds of
thousands of MBA (Finance) experts. Additionally,
the nation has the greatest workforce of
governance experts in the world with over 62,000
company secretaries, or governance professionals.
The accounting sector is one of the largest in
the world, with a total market value of close to
576 billion. In the US, the trends are mainly
positive, with some of the largest audit firms,
hedge fund administrators, insurance companies,
banks, and financial service providers
outsourcing financial and management accounting
projects to offshore employment firms with
offices in India. Another potential for Indian
offshore workers may come from UK-based
businesses, which are now rapidly taking
advantage of accounting offshoring, much like
their US-based counterparts.
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Whats in store?
The Big Four audit firms and other major
accounting and finance organizations with branch
offices throughout the nation include hedge fund
businesses. Numerous financial businesses with
offices in India include Credit Suisse, Merrill
Lynch, Fidelity, Morgan Stanley, Deloitte, KPMG,
PwC, and EY. However, prospects in the future
would depend on small and medium-sized businesses
that were prepared to hire Indian professionals
to handle their accounting needs. The industry's
overall future is bright, especially with the
advancement of information technology, faster
internet, a conducive ecosystem, abundant IT
professionals, ecology, and cloud technology. The
offshore industry is growing quickly, and the
future is promising. With the best-in-class labor
and infrastructure already in place, accounting
outsourcing trends for Indian professionals will
see a considerable increase in the coming years.
In fact, the IMF projects that India will become
a 5-trillion economy by 2026-27.
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Entigrity is a trusted offshore staffing partner
to over 650 accountants, CPAs, and tax firms
across the US and Canada. Our flexible and
transparent hiring model gives helps firms of all
sizes to hire staff for accounting, bookkeeping,
tax preparation, or any other task for 75 less
cost. As a firm 'run by accountants, for the
accountants', Entigrity captures the hiring needs
of accounting firms most precisely, providing
staff that works directly under your control and
management, still, you are left with the least to
worry about compliance, payroll taxes, overheads
or any other benefits.
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