India Case Study

India Case Study

1. Characteristics of India

   • Rapid economic growth in India in recent years - the economy has grown 7% a year since 1997
   • In 1990 there were economic reforms to reduce barriers to trade and encourage Foreign Direct Investment
   • 3 million people graduate from Indian universities with 500,000 engineering graduates
   • English is widely spoke and under this is important for TNCs to so they can establish customer service

2. Main reasons that Insia has grown

   • Local companies in the service industry e.g. IT services grew as they supply foreign TNCs
     • In the 1980s and 1990s some young indian IT professionals migrated to the UK or US to work for western companies and when they came back they understood the IT needs of the UK
     • The low cost of labour in India mean that Indian companies could provide the same service as their competitors but at a lower price
     • As the service industry began to grow, TNCs began to outsource (give contracts to outside businesses rather than doing it themselves) because it was significantly cheaper
   • TNCs relocated service areas of their business to India
     • The availability of skilled English speaking work force means that India can offer a range of office based services to foreign TNCs such as customer service call centres
     • By moving their call centres to India TNCs can save a lot of mount because the average salary in an Indian call centre is £1200 a year whereas in the UK it is £12,000 a year
     • Other examples of services transferred to India include IT technical assistance and financial administration, e.g. KMPG employs people in 10 different Indian cities