A study has found that firms are increasingly outsourcing their IT services to Eastern Europe, China, and Morocco. India still has a fair share of the market, but with the rupee so strong some companies are looking elsewhere:
“According to the study, since the beginning of January 2007, UK’s 20 largest IT services suppliers have opened 21 new global delivery centres. However, of these only two are were located in India. Four such centres were set up in China, while Eastern Europe and Morocco had three each, the study added.
“India’s position as the premier low-cost IT sourcing centre is not under serious threat in the near term. But what we are seeing is vendors (are) looking to reduce theirreliability on India’s heated labour market…,” Nick Mayes, a senior consultant at PAC, said in a statement. The 20 largest IT services vendors in the UK are based on rankings in PACs annual SITSI report. These include EDS, IBM, Fujitsu, Capgemini, Capita, Accenture, CSC, HP, BT Global Services and LogicaCMG.”
While IT outsourcing and call centres generate large amounts of money, they still only employ a fraction of the Indian workforce. India will only really be shining once farming becomes a notably profitable industry. This state is perhaps not too far away, as food prices continue to rise (although this causes inflation to rise in India, so it is a mixed blessing):
“Finance Minister P Chidambaram on Wednesday said that an investment boom in India was continuing but a sluggish farm sector was hurting overall growth. The Indian economy, Asia’s third largest, has grown at an average 8.8 per cent in the past four years and is estimated to grow 8.7 percent in the fiscal year that ends in March.
The farm sector, which supports nearly 60 per cent of India’s population and accounts for 17.5 per cent of the country’s gross domestic product, has stagnated in the past few years. Chidambaram expects the economy to grow 8.8 percent plus in the 2008-09 fiscal year.
Talking about the inflation, he said in India it is still a threat because of high food prices, as he promised to consider policy intervention if growth slowed in any industrial sector of the $1 trillion economy … India’s food output has failed to keep pace with the demands of its 1.1 billion population, most of whom rely on the land for all or part of their livelihoods.”
At the moment high food prices are hurting India, because their farming is so inefficient. But if farming improved then they could become a net exporter of food, which would put their long-term economy on a much firmer footing.
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Filed in: Current affairs,Economics,India,Technology