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Business and Law |

IT Offshoring strategies

 
By : Anil Kumar Singh, Senior Consultant, McKinsey & Company
Industry : Management & Strategy Consulting Functional Area : Outsourcing
Activity:  2 comments  637 views  last activity : 07 06 2010 20:18:04 +0000
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Offshoring to India is on the move and definitely the market will get wider with many small and medium sized businesses of the US eyeing on India's offshoring industry. Definitely, India will be a hot favorite spot for it provides best in quality work and cheap labour.

But then it is extremely important to take care of legal issues while outsourcing to India.

 

Few factors that needs to be taken care of are explained below

 

TAXATION

Taxation policy of India has a great impact on offshore outsourcing. always have an eye on the tax implication you have to deal with.This is an important legal aspect to deal with, because different countries have different tax laws.

 

HETEROGENEOUS LEGAL SYSTEMS

The rules and governance  are different in different countries .In outsourcing, you and your outsourcing provider have to make sure to include two different legal systems. This heterogeneity in the legal system is an important legal issue with outsourcing that companies have to deal with. This problem exists, because there is no legal system which can be used globally. Different countries even have different intellectual property laws.

 

LOCAL LAWS HAVE GREAT INFLUENCE

Some countries have strict data protection and privacy laws, which might be a hindrance in outsourcing. In such cases, the outsourcing provider and the customer would be legally bound and share equal legal responsibilities. This might increase the liability of the customer and in some cases can become a legal issue in outsourcing. Outsourcing service providers also have to protect their business from civil penalties. Conduct some research on the country that you want to outsource to and if the local laws of that country are a hindrance, find another outsourcing service provider. The influence of local laws is another major legal issue in outsourcing.

 

DISPUTE SETTLEMENT

When making a settlement contract with your outsourcing provider, ensure that you mention the system of dispute settlement. Clarifying the legal aspects in outsourcing and dealing with the problem of dispute settlement can avoid future problems.

 

 

 Top Comment : aditya ghare   | 05 12 2009 11:31:58 +0000
Thank you Mr Singh, very informative outline of the legal perspective.
 
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2 comments on "Offshore outsourcing to India. well equipped with the legal issues?"
  Commented by  Makrand Bhave, Sales Promotion Manager, Camlin Limited    | 05 12 2009 12:02:35 +0000
Very informative indeed!
  Commented by  aditya ghare, Multimedia Designer & Developer, Final Edit    | 05 12 2009 11:31:58 +0000
Rating : +1 
Thank you Mr Singh, very informative outline of the legal perspective.
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