Sample Project Report Essay Example

globally.

India has emerged as a favored offshore outsourcing location over the last ten years, with companies globally reaping the advantages of offshoring their processes to India. This trend is equally evident among businesses in the United States.

India, among other countries, is offshore outsourcing some of its operations to save costs. This is due to the abundance of talented professionals in India and their motivation. India has a competitive advantage over other countries in IT outsourcing because of its experience, proficiency in English, government policies, and quality services. Offshoring to India offers significant cost savings with estimates suggesting that HB can save around 30 to 40 percent for most services. These savings are a result of the availability of skilled professionals, supportive government policies, and high-quality offerings in India.

Indian professionals work at wages significantly lower than those in the US and Europe, resulting in cost savings in the labor sector.

Additionally, infrastructure costs in India are lower, which leads to significant savings on capital.

Labor management in HB involves managing the fluctuation of required employees during a project. In-house processes require companies to pay for and provide office space for employees, regardless of their project workload. However, outsourcing eliminates this expenditure as the outsourcing vendor either reallocates bench employees to other clients' projects or covers the cost of inefficiency. This change is expected to increase Earnings Before Interest, Taxes, Depreciation and Amortization (EBITA) by 150%. Additionally, there are significant differences in labor costs between the US and India within the IT industry. For instance, a US-based IT professional with 1-2 years of experience charges between USD 50,000 to 70,000 per year.

The cost of hiring an experienced professional in

India is around 11 to 16 percent of the cost in the US, which is equivalent to approximately USD 8,000 per year. Furthermore, clinical trials conducted in India have shorter turnaround times, reducing time by 30 percent and transcription processing backlog by 50 percent. Additionally, the twelve-hour time difference between India and the US allows for round-the-clock work as tasks can be completed during Indian daytime while it is nighttime in developed countries. Consequently, this helps eliminate or minimize any accumulation of front-end and processing tasks.

The benefit of this time difference between zones would be particularly noticeable in IT outsourcing. Projects typically involve both onsite and offsite teams. During the day at the client site in the US, the onsite team carries out work and passes it on to the Indian team before they go to sleep. The offsite team in India then proceeds with the same project during their daytime hours. When the Indian team goes to bed, the onsite team resumes work, resulting in a significant reduction in project turnaround time.

The Indian government offers tax holidays for IT-enabled products and services under Section 10A and 10B of the Income-tax Act. These services encompass various areas including back-office operations, call centers, payroll, data processing, geographic information systems, human resources and training, insurance claim processing, legal services, medical transcription, engineering and design, accounting, administration and support, and content development.

HB Tech will become a wholly-owned subsidiary of HB Info Tech through 100% direct investment allowed by the FDI policy. The company plans to establish its campus in Bangalore, Karnataka (INDIA), which is commonly referred to as the Silicon Valley of India due to its skilled workforce,

communication infrastructure ,and business-friendly environment. This Indian subsidiary will serve as a significant center for Research and Development (R&D) in South East Asia.

HB Info Tech aims to strengthen its presence in South East Asia and offer affordable business solutions. The parent company will work closely with the subsidiary and oversee its progress. A written agreement will specify the arrangements for research and development, as well as technology transfer. To establish the subsidiary and meet all administrative and legal obligations (such as applying for name availability, preparing memorandum and articles of association, tax registration, and labor registration), HB Info Tech will engage a local accountant, lawyer, or other service providers in India.

HB is currently in negotiations with a local third-party service provider in Bangalore city. This provider offers basic services such as payroll, benefits, and human resources support, similar to what companies like TriNet or Administaff provide in the U.S. HB Info Tech will have a legal written agreement with this service provider. Additionally, the table below outlines the actions and estimated time schedule for the incorporation process of establishing an Indian subsidiary through a local service provider, based on research. The approximate cost for this process ranges from U.

S. $7,500 to U. S. $20,000 is the cost range for incorporating and registering the subsidiary. This cost includes incorporation, registration, and service fees, but does not include the initial capitalization provided by HB Info Tech. After incorporation, several tasks can be performed simultaneously.

The use of this structure would help in avoiding administrative delays, such as the need for non-India residents to have their incorporation documents notarized in an Indian consulate in the United States. Additionally, it

would enable HB Info Tech to establish the subsidiary at a faster pace. Initially, the subsidiary will have two local Indian nominal shareholders for efficiency purposes. These individuals will serve as nominal shareholders for a designated time period to establish the subsidiary, and their shares will be subject to the Parent Company HB Info Tech's right of purchase. Furthermore, HB Info Tech will receive shares from the subsidiary once governmental approvals are granted.

The parent company will collaborate with the service provider to ensure that the subsidiary has sufficient authorized share capital for the parent company to capitalize it. The service provider is prohibited from issuing any additional shares or ownership rights in the subsidiary without written approval from the parent company. The initial local Indian shareholders will also agree to comply with all written instructions and budgetary guidelines provided by the parent company. Choosing a managing director is a crucial business decision. As per the Companies Act of India, the Board can designate one of the directors as the managing director of the subsidiary. This managing director will hold a full-time position and possess similar powers as those held by a President and CEO of the parent company.

The operational head and overseer of the daily affairs of the subsidiary will be the managing director. The individual chosen for this position will come from the initial shareholders and directors of the company. Having a local managing director will address concerns regarding administration and work culture, but other options will also be considered. Initially, HB Tech must have at least three directors on its Board, with one being an India resident who serves for a specified duration

to establish the subsidiary or fulfill the role of managing director.

All directors, except for representatives designated by the parent company HB Info Tech, will be executive officers of HB Info Tech. The agreement between the parent company, local service provider, and initial local director will require the local director to comply with budgetary guidelines and other written instructions from HB Info Tech. The local director must also obtain prior written approval from HB Info Tech for any expenditures inconsistent with the guidelines or for incurring other obligations. To maintain financial oversight, the subsidiary will be funded on a monthly basis using written budgetary guidelines approved by the parent company.

The parent company can guarantee that the subsidiary operates according to its expectations in terms of infrastructure and other aspects by providing monthly funding. The CFO of the parent company will establish communication channels with the subsidiary, including weekly telephone calls with the managing director or finance officer, in order to monitor expenses. Additionally, the parent company can limit the level of authority given to the local managing director of the Indian subsidiary, requiring certain decisions such as significant expenses or agreements with third parties that impact the subsidiary to be approved by the full board of directors.

Operational Implications and Related Issues: It is essential to carefully document and monitor the operational relationship between the India subsidiary and the U.S. Company in order to preserve the distinct legal status of each company.

There will be intercompany and other agreements between both entities in order to have the intended effect for tax, isolation of liability and other business purposes. One of the major issues would be of currency

exchange restrictions. The government of India regulates the movement of funds out of India and approval may be required before cash may be transferred out of India. Intellectual Property Infrastructure Intellectual property protection is implemented in India both by statutory compliance and by written agreement. Copyright and patent protections are the primary types of statutory protection. Trademark and service mark statutory protections also exist.

Statutory protection is crucial as it offers certain safeguards even in the absence of an agreement, provided that statutory requirements are fulfilled. Trade secret protection is established through agreement, while patent protection is the most powerful form of intellectual property protection since independent development cannot be used as a defense against infringement claims. Intellectual property protection is available for the U.

S. ompany’s work in India is protected to the same extent as an Indian national’s work. Copyright protection does not require any action for implementation, but patent protection requires the issuance of a patent. In India, copyright protection is available for software, but the certainty of patent protection for software is uncertain. The enforcement of statutory and contractual intellectual property protection poses a practical challenge in both the U.S. and India.

S. and India should take practical measures to protect their technology. These measures may include appointing trusted management, keeping some core technology components in the U.S., managing the development environment in India carefully, using software fingerprints and watermarks, and implementing other security measures.

Indian labor and employment laws, similar to those in the U.S., are enacted at both the state and federal levels. India, like America, functions as a federation of states with a constitution that delegates distinct powers to the national or

central government as well as the state governments. However, a notable distinction between Indian employment law and U.S. law lies in its importance and fundamental character.

According to Indian legislation and case law, employment relationships in India are primarily contractual and do not typically follow the concept of "employment at will". While written employment contracts are not always required, the nature of employment is still considered contractual. Furthermore, there are specific tax provisions in India that affect the compensation arrangements provided to employees. For example, some benefits such as stock options may be taxable for employers instead of employees. In terms of cultural differences, American companies may not achieve their intended cost-saving outcomes by outsourcing IT jobs to offshore entities based in India.

American-trained managers often overlook the fundamental cultural disparities between the two workforces when it comes to Indian corporate working styles. The working approaches of Indians significantly vary from those of Americans, with one of the major drawbacks being a lack of emphasis on time management. While punctuality and effective time management are highly valued traits among Americans, they do not receive the same level of priority among Indians.

The rapid growth of the IT sector has resulted in the adoption of the American working style in many offices. However, this shift is limited to large corporate and multinational companies. Smaller and average-sized companies still lack certain facilities such as employee training programs, motivational meetings, and teleconferencing. Activities like constructive criticism and employee bonding are unfamiliar and often disregarded in favor of the American working style. In the United States of America, efficiency and meeting deadlines are considered normal and expected. However, in India, it is

crucial to recognize that one is dealing with individuals from a different cultural background who have distinct ways of thinking and interacting.

In America, what is considered reasonable and feasible may not be applicable in India, and vice versa. The perception of aggressiveness can be seen as disrespect, resulting in a breakdown of communication and motivation among Indians. Therefore, it is important to invest time in understanding them as individuals to establish professional trust. Additionally, India's diverse nature means that each person one encounters will possess a distinctive combination of Indian and Western values, influenced by factors such as socio-economic status, education, class, and religion.

Stock Options for Employees in India: In order to attract and retain employees, HB Info Tech plans to offer stock options to key employees of their subsidiary. This will allow these employees to purchase common stock of the U.S. Company. Indian employees are already familiar with this form of compensation and higher level employees typically regard it positively, although lower level employees may prefer cash instead. The stock options for Indian employees will generally be granted from HB Info Tech's equity incentive plan.

If the plan meets certain guidelines set by the government of India, it will receive the same favorable tax treatment as incentive stock options under federal tax regulations in the United States. India has relaxed its currency exchange controls for stock option exercises by employees, and there is currently no limit on the amount employees are allowed to remit for this purpose.