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India's niche in globalization part 2

india_outsourcing.jpg I have reported before on India's role and essentially niche in globalization as the "back office of the world." The main point epitomized in this report by Deutche Bank Research was that India currently scoops up an astounding 44% of the global market in terms of IT services and IT-based business processes. This is impressive by any measure but as reported this week by the Economist the potential of India as offshoring and outsourcing country seems to show no end.

 See article here (walled for non-subscribers!)

Not only does the investments from it-companies continue to flow in at a steady rate but other businesses are now targeting India as well as a place of cheap labour combined with a relatively well-educated English speaking workforce. According to the Economist a third stage of outsourcing is now apparent in India characterized by the move of ever more complex tasks to be performed in India for foreign companies.

"All these investments illustrate that a third stage of the great Indian services-export boom is well underway. In the first, firms such as TCS developed world-class expertise in software “application development and maintenance”, and their low-cost developers became the preferred partners of many Western IT firms. In the second, Indian firms and the local “captive” operations of multinationals started offering low-end back-office services that could take place a continent away—telephone call-centres, transcribing medical records, processing insurance claims and so on. In the third, in both ITses”, and the broader spectrum of other “business processes" ever-more sophisticated functions are happening in India."

The article describes an India which is far more versatile than merely being confined to the establishment of call-centers, simple software programming facilities etc. India is ready to take on much more and the market appears to be there.

"(...) “traditional IT outsourcing”—such as the remote management of whole systems, a market now dominated by the big global IT consultancies. This is expected to rise from 8% of Indian sales now to about 30% in 2010, while software-development's share will fall from 55% to 39%. In business-process-offshoring, the big industries will remain banking and insurance. But rapid expansion is also expected in other areas, like legal services."

The biggest obstacle ironically seems to be that the educated workforce in India is not growing fast enough. Moreover, these new businesses need help from the government in terms of the steady development of infrastructure.

"Yet the supply of talent may be the biggest constraint on the Indian industry's growth. (...) IT firms in Bangalore, for example, are in revolt against the local government for its neglect of basic amenities."

But surely, this cannot stop India; right?




Finally, a deal ... but is it any good?

EUROCOIN.KOMMISSIONEN.jpg European negotiations are always a treat to follow particularly when it has to do with the decision on the recurring seven year budget deal. This case is no exception ... as reported by The Economist's global agenda the negotiations mirror an environment of anxiety where the possibility of not striking a deal really was not a plausible outcome.

"After the popular rejection of the proposed EU constitution in France and the Netherlands, the acrimonious break-up of budget talks in June, and multiple setbacks to economic reform (symbolised by the German election result), most European leaders were anxious for any budget settlement."

But what can we really take away from this deal then ... ?

On a personal note I am dissapointed yet not particular surprised that the Common Agricultural Policy (CAP) largely is left untouched. I feel confident that the time of the CAP is drawing to an end but I could have wished a more firm stance. But in an intergovernmental arena tangled up in discriminatory rebates (sorry mates) and the devotion to cohesion policy I wonder whether we should not be happy that a deal was finally made.

What is also interesting from an intergovernmental point of view is that the old Franco-German axis seems to be broken with the ascession of Angela Merkel which actually ended up stealing a lot of Mr. Blair's thunder in cutting the final deal.

See also this artice from FT which provides an overview.  

As always there are also some nice discussions over at the Fistful of Euros

See these posts;

Edward Hugh - Posted before the deal was cut, but with a nice perspective and some good comments.

Doug Merril - Discusses the presidency institution mirrored in the UK presidency's difficulties to cut a deal.

Emmanuel (guest AFOE writer) - This post is an excellent overview and asessment of the budetary deal and its remnifications.  


A take on aid policy that might actually work

aids.victimsbarder.jpg Admittedly, I should have blogged this two weeks ago when Owen Barder posted it on his blog. However, when it comes to solving the massive health issues of developing countries most notably in Africa a couple of days' delay is not important.

What am I talking about then ?

When discussing world health the cruel and essentially intolerable facts are that people in Africa are dying of diseases which we, as a race, have been able to cure for many decades. This invokes two strings of thought in my mind. Firstly I am ashamed because the perspective of 1000 children dying in Africa of an illness I could potentially have had a 1000 times does not fit in with my view of the world. Secondly and more pragmatically I ask ... what can be done about this?

In his role as a senior associate at the Center for Global Development (CGD) Owen Barder and his colleagues have come up with a new solution to the tricky question of how to get pharmaceutical firms to develop the quantity of medicine and also the vaccines necessary to at least push a region as Africa in the right direction.

See their proposal here

The idea centers around a sort of government aided commodification of vaccines. If the market for vaccines gets big enough maybe the pharmaceutical cooperations will have the incentive to pick up the pace.

" (...) markets are too small, even though these vaccines would be a hugely cost-effective way to save lives in developing countries.  To solve this, rich countries could offer a guarantee: If a company can develop a vaccine for a disease like malaria, we will pay for it to be bought in large quantities in developing countries.  This creates strong commercial incentives for the biotech and pharmaceutical industry to accelerate the development of vaccines that will save millions of lives a year in developing countries."

Now, is this what we want or is it merely a display of cynical Anglo-Saxon profithunting ?

I believe the proposal is brilliant because it does not imply the ultimate naivity that the crisis in Africa will solve itself through one odd pharmaceutical firm's sudden CSR frenzy to save the world. Rather, the proposal implicitly acknowlegdes and essentially tries to exploit the forces of the market. And as such I see it as adaptive and original.     

Luckily for Owen Barder and his team I am not the only one approving this project. A report by the Italian finance minister Guilio Tremonti based on the CGD's work is also now being endorsed by the finance ministers of the G-7 group through this communiqué.

We can only hope that the proposal brings succes and ultimately a solution to one of mankind's biggest issues.