cbroberts

In an MBA class in which I am currently enrolled we discussed issues of outsourcing, offshoring, and the role India plays in this process. Our discussion led to me to thinking about the IT industry, and the effect that offshoring and outsourcing has on it. These are my thoughts.

In the book entitled: "The World is Flat" by: Thomas L Friedman he talks about how the world of industry and business is flattening out due to the increased development of emerging economies and their deployment of new technology. In this book, he uses India as the prime example. Friedman says that there are ten major "Flatteners" as he calls them in the new global economies which are working to make the world smaller (or flat). One of these flatteners is outsourcing.

In years past India was known as a strong socialistic economy relying heavily on agriculture as the main supportive industry, but within the last two decades technology as opened the door to India, thus allowing them to become major players in worldwide business. They are doing so mainly within the borders of their own country. This coupled with their large population surge (which leads to extreme competition in the job market) has produced very effective IT professionals. However, old political views of the past hinder the expansion of this line of work within their borders. India countered this by enacting economic reforms. This is reflected in the economic reforms of the 1990's. One of the notable reforms was the relaxation of stipulations placed on foreign investors doing business in India. This among other reforms was the spark that was needed to get the new Indian economy going, and it has worked.

To answer the question, has the Indian government helped or hindered growth? I would say they have helped it. They have done this by enacting economic reform and doing it in a way that cuts through the social norms of the past. The government has also increased its focus on education to help prepare its citizens to function in this new global economy (as pointed out in a recent Newsweek article about the education boom in India), both by teaching more English skills and by allowing more private schools to educate its population. By doing this, India is making a great effort to establish itself as global economic power and they are doing so through outsourcing and education. This combined with lower waged labor and the ability of the Indians to speak English (as opposed to China for example) has made India a prime target for offshoring and outsourcing activities. As the infrastructure supporting these activities in India becomes stronger so will the practice. In the times to come, I only see India becoming more and more of a force in the IT industry and I see this practice growing.

Friedman, T. L. (2005). The World is Flat. New York: Farrar, Straus and Giroux.
(n.d.). Retrieved September 24, 2007, from www.msnbc.msn.com/id/11571960/site/newsweek/
Rajaraman, I. (2000). Recent Economic Reforms in India. Retrieved September 24, 2007, from http://www.acdis.uiuc.edu/Research/S&Ps/1993-Sp/S&P_VII-3/india_reforms.html