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American trust in Indian outsourcing remains high

August 2006
American trust in Indian outsourcing remains high

American trust in Indian outsourcing remains high

Information technology may be India's crown jewel at present, but even this industry faces formidable challenges in the coming years. Poor infrastructure, eroding cost competitiveness, and shortage of talent are some of the problems. But the biggest one by far is that India's growing prosperity hasn't touched a shamefully large percentage of the population. "Business leaders know that including the excluded majority in the rise of modern India is essential for social harmony, and ultimately for the success of their firms," points out The Economist magazine, adding, "They also know that compared with improving their bottom lines, this really is the hard part." Now for some good news about what is, after all, a recent acquisition for India. IT generated $36 billion in revenues last year alone, accounting for almost 5 percent of the nation's GDP. And for the next few years, as per one study, it'll be responsible for 17 percent of the growth, creating 7 percent of India's GDP by the end of this decade. Tata Consultancy Services, the largest outsourcer in the country, has just posted a quarterly profit gain of 33 percent ($186 million). The talent shortage is perhaps debatable, since India's population is young rather than old when compared to many other nations. This demographic shift is no secret. By 2016, there will be 510 million Indians in the 15 to 35 years age group, accounting for 40 percent of the country's population. Over the next five years, according to another projection, 23 percent of the rise in the world's labor force will occur in India. Yet another bright spot is that, based on a recent survey done by a global law firm, American trust in the Indian outsourcing industry remains strong. India has the 3rd highest rank in a list of 47 countries. Canada and Ireland hold the top two spots, respectively, whereas Wales comes in 4th and Germany comes in 5th. For the record, the Philippines, Haiti, Mexico, Russia, Saudi Arabia and Jamaica have the lowest trust rankings. A report from the Ponemon Institute, a think tank that developed this study, notes how "India and Ireland have increasingly become some of the most attractive places for outsourcing ventures – not only due to a well-educated workforce and lower salaries, but because those jurisdictions have made an active effort to establish strong regulations when it comes to outsourcing issues."

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