Why The Indian Economy Will Suffer At The Top
The Indian economy is on track to grow to become one of the world’s largest. I read a humourous thread over at DigitalPoint forums where an Indian member has posted with a detectable trace of anger that he was looking forward to outsourcing to the US for online projects.
The main reason India in particular won’t survive is that they currently offer cheap labour, and that’s what’s fuelling their economic growth.
Cheap labour is a strong asset for any economy when it comes to dealing internationally, but the problem for India is that this is all it has to offer in the outsourcing sector. As the economy grows labour costs will increase which means that international companies will take their outsourcing operations elsewhere.
In the UK, there has been a strong backlash against foreign call centres. Largely because there can be a clear language barrier and it can feel as though there is no direct line through to the company behind the call centre operation.
The only reason that business is located within the Indian economy is to save money. There is no ‘quality’ benefits, in fact customers dislike dealing with offshore call centres. Once the cheap labour goes, the entire outsourcing infrastructure will follow suit.
It remains to be seen whether the Indian authorities will be able to manage labour costs, and indeed whether they can help differentiate their services any further that on a purely low-cost basis. If they don’t, I think the economy will find itself struggling for outside investment and anu further growth.
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