Financial Daily from THE HINDU group of publications
Tuesday, Aug 31, 2004
Financial Daily from THE HINDU group of publications Tuesday, Aug 31, 2004 |
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Money & Banking
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RBI & Other Central Banks Take in more overseas partners, BPO units told Our Bureau
Mumbai , Aug. 30 INDIAN partnerships with overseas companies would pacify the protectionist reactions by developed countries, according to the Reserve Bank of India's Annual Report which was released on Monday.The BPO segment in India attracted $1 billion worth of foreign direct investment during 1996-2002, which works out to 5 per cent of the total FDI inflows of $20 billion during the period, said the report. ``India needs to increase partnerships with more foreign affiliates in the information technology segment to provide services offshore, besides attracting more FDI to undertake BPO activities in the country,'' was RBI's advice. ``The Indian BPO market should also strive to attain maturity through consolidation to withstand the competitive threat, particularly from the emerging East Asian countries. This could be achieved through increased mergers and acquisitions, not only in India but also in developed countries, which would help achieve cost efficiency and competitive price advantages,'' said the report. Indian entities should also diversify their markets to other countries rather than depend only on the US market. "India would also have to continuously innovate and maintain its low-cost niche in order to compete with competitors such as China, the Philippines, Malaysia, Australia, South Africa and Singapore. The annual report noted that several studies have indicated that offshoring of the US business to India provides greater benefits to the US economy than to the Indian economy: "Out of every $1.45-$1.47 value created, $1.12-$1.14 goes to the US, and India receives only 33 cents." It noted that although several US States have introduced legislations seeking a ban on outsourcing from India; there were, on the other hand, influential views in the US that feel that the fear of job losses due to outsourcing is exaggerated, said the RBI. The European Union observes that BPO is good for India and good for the world economy. The UNCTAD has called upon developing countries to bring a legislation relating to BPO under the General Agreement on Trade in Services in the wake of the legislative measures on the US, said the report.
More Stories on : RBI & Other Central Banks | Outsourcing
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