Economic Interactions and Flows

Outsourcing - India India is located in South Asia and according the 'Global Services Location Index' is the most attractive location in the world to locate global services, including IT. Although New Delhi is the capital of India and Mumbai its financial centre, it is actually Bangalore (Bengaluru) that has become its most important IT centre. Bangalore has a population of 8.4 million and is known by some as the 'Silicon Valley of India'. Bangalore is found towards the south of India. It has a new international airport (Bengaluru International Airport) that opened in 2008 and it has quickly become India's fourth busiest airport. The city is also in the process of building a 42km (41 station) rapid transit system and the city is also connected to the Indian national railways system. The city also has an extensive bus network and an improving road network. In recent years Bangalore has become India's most important centre for hi-tech industries. The government has aerospace, defence, IT, software and telecommunication research facilities based in the city. This has meant that Bangalore has enjoyed sustained growth nearing 10% per annum and now has India's third highest GDP per capita. As well as enjoying domestic investment, Bangalore has also enjoyed FDI. Bangalore's BPO clients now include; Reuters, HSBC, Dell, JP Morgan and Citi. Their ITO clients also include Microsoft, Google, Yahoo, Cisco, Samsung, Motorola and Intel. Bangalore has managed to attract FDI and become home of IT outsourcing for a number of reasons including: Most Indians speak English either as their first or second language India has a growing number of high skilled graduates Indian workers are prepared to work unsociable hours (night shifts to coincide with working hours in Europe and US). Indian pay is lower They have strong historical links with UK and other commonwealth countries They are a democracy Bangalore is home to some of India's best universities e.g. Indian Institute of Science India has improving transport and communication links India is an emerging market Reputation and growing success Geographical location near to Europe, Middle East and East Asia Seven Reasons Why Bangalore Still Tops The Offshoring League - Silicon.com Bangalore Remains Outsourcing Capital of the World - InformationWeek The Rise of the Bangalore Tigers - BBC article

Bangalore is best Indian City Says Survey - BBC article Innovation Hotspot Grows in Bangalore - BBC BT Opens Indian Call Centres - BBC article Multinationals lead India's IT revolution - BBC article BPO: Business process outsourcing which basically means backroom operation like human resources, customer services and accounting. ITO: Information technology outsourcing includes things like IT support, programming, collation of data and data analysis.

Top Outsourcing Cities - 2008

Despite its success as become the most attractive location for IT outsourcing, India does face many problems in maintaining its position. Potential problems that India may face in the future include:

• Competition from cheaper locations e.g. Vietnam and the Philippines (The Philippines: The World's Hotline - BBC article)
• Saturation of its IT capacity meaning internet speeds slow
• Demand for increased wages from its employees
• Increasing costs in terms of rent, electricity, etc. (inflation)
• The call for TNCs to return their operations (especially call centres) to their home countries. This is because many customers get annoyed speaking to people who are sometimes using their second language and don't understand the culture or the problems of the customers country.
• Skilled workers who maybe currently underemployed (many call centre staff will have degrees and masters) finding better employment as economy grows
• Less people willing to work anti-social hours
• Greater call to keep jobs in home country during economic downturns. UK and US companies are already moving some of their call centres back home (Santander Brings Call Centres Back to the UK - BBC article)
• Growing risk of terrorism (Mumbai Rocked By Deadly Attacks - BBC article)
• Increases in value of Rupee (Indian currency) making them less competitive
• Corporate scandals (Fear Over India Call Centre Fraud - BBC article)

Source: http://greenfieldgeography.wikispaces.com/Information+flows

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Interesting to see that the Philippines is emerging as one of the top countries for call-centre offshoring in the world because our culture is so integrated (some might say homogenised) by western culture and we have a strong english speaking workforce. What other industries would find the Philippines a better destination for outsourcing then its other asian neighbours?