India has a natural advantage in the global outsourcing arena. With over 30 million Indians speaking English, India ranks among the top three English-speaking countries in the world. As a society that has a large population of middle-income households, India has a pool of 1.8 million engineers, 1.3 million medical professionals, and over 4.1 million other professionals who have been trained in English right from primary school .

English is the principal language of instruction in most Indian schools and other educational institutes, and coursework right from primary school to university is undertaken in English. As a result, India has climbed higher on the value chain in the outsourcing arena. Many companies including GE, Nortel, and Ericsson are outsourcing their high-end R&D work to India. Companies such as Computer Associates, Microsoft, Cisco, and Baan have turned to India for high value-added product development, including conceptualization.

India's combination of project management skills, technological sophistication and low labor costs makes it a particularly attractive candidate for outsourcing. The genesis of the relocation of business processes to India can be traced to the country's emergence as an offshore site for software production in the mid 1980s. By the late 1990s, India became a leading provider of contract software programming due to its lethal combination of skilled, low-cost manpower and project management skills.

India's position in this industry was further strengthened in 1999 when it reformed its public monopoly in the telecommunications industry to a market-driven system by allowing a large number of private providers to enter the business. Private providers were allowed to choose their specializations, ranging from providing niche services such as backbone and network management to full-service integrated voice and data operations. The result has been the establishment of a telecommunications network with quality and cost levels of developed countries, especially in the larger cities.