Volume 19, Number 2 Article by Mukul G Asher and Amarendu Nandy June, 2007
Demographic Complementarities and Outsourcing: Implications for India :
In the current phase of globalisation, opportunities for outsourcing and offshoring of services have become feasible and economically efficient. Basing their paper on the premise that demographic trends will increasingly be among the key factors influencing the dynamics of comparative advantage in outsourcing and offshoring, Mukul Asher and Amarendu Nandy analyse the implications of differing global demographic trends for securing these opportunities as a part of India’s calibrated globalisation strategy. The paper also briefly notes that differing demographic trends among the Indian states would require appropriate public policies for smoother adjustments among them. The paper argues that demographic complementarities with high-income countries provides India with a one-time opportunity to sustain its growth rate and occupy all segments of global outsourcing and offshoring. India has used the labour cost advantage to gain a reasonable market share and is on track to grow the IT sector to 7 percent of GDP and 35 percent of its exports by 2008-09. India however faces serious challenges in sustaining its international competitiveness. The internal challenges include increasing the supply of internationally competitive manpower, reducing the current mismatch between quantity and quality of supply and demand for skills, improving physical infrastructure, and broadening and deepening the domestic IT market to help improve overall competitiveness of the economy. The external challenges involve emergence of several competitors in all segments of the outsourcing and offshoring chain; and protectionism, including restrictions on movement of natural persons. India needs to improve branding and marketing of the country, practise more skilful commercial diplomacy and better leverage the Indian diaspora with the objective of expanding India’s economic and strategic space. India must provide a conducive economic, social, and political environment for nurturing world class human resources and globally competitive companies which are the only sustainable sources of success in managing calibrated globalisation.
Reprint No 07201
