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Outsourcing to India: Great opportunities and potential blockers for MNE's author ASHIM CHAKRABORTY. MBA, MSc

Outsourcing to India: Great opportunities and potential blockers for MNE's author ASHIM CHAKRABORTY. MBA, MSc

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Published by ashimcb2006

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Categories:Types, Business/Law
Published by: ashimcb2006 on Sep 21, 2011
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 Advantage and Disadvantage of Outsourcing to India andRecommendation.Introduction:
Outsourcing can be described as part of an organizational operation to an external trader to achieve costleadership and potential market share. In the existing global economy, it is significant for Multinationalenterprises to locate ways to achieve the organisational vision by using less resource and cost.India is one of the world’s most potential and emerging economies. Besides the booming economy, marketsize, cost factor, governmental policy and other global corporate friendly environment have been inspiredMultinational enterprises ( MNE) to have their secure foot hold in India as a part of their global outsourcinglike British petroleum, Nokia, General motors, Ford motors, Samsung, LG, Microsoft, IBM etc.However, in spite of having a great possibility and prospects, the outsourcing performance of Multinationalenterprises (MNEs) in India have been apparently mixed. A lot of MNEs has succeeded noticeably and doingpretty well, however a numerous MNEs those market access strategy and penetration strategy have beensucceeded in different countries are struggling to cope with Indian market, and produce appropriate productsand service as required. Why some MNEs are accomplishing their vision so well where as others has failure tobe succeeded? This paper is an initiative to provide an analytical explanation of external influentialdeterminants of Indian market to attract MNEs for outsourcing. Advantage and disadvantage of globaloutsourcing for MNEs in India will be discussed by reviewing the previous studies and two case studies will beanalyzed in order to supporting different aspects and creating a set of recommendation to Indian market toaccelerate the success rate by reducing drawbacks.
Evaluating the Influential factors associated with global outsourcingin India via PESTLE analysis:
According to (UNCTAD 1998) MNCs are highly searching sites where they can join their own portable resourcesmost effectively with the importable assets they require to come up with goods and services for theirexpecting market. This paragraph of this report will explain different external factors act as primary issues thatMNEs always analyse before their foreign direct investment in India.
 
It has been undeniably exposed that Multinational Enterprises (MNE) are considers the political situation as akey influential issue for investment decision-making. India is world’s biggest democratic state with Englishcommon law; judicial review of governmental act.The government’s activities to Foreign Direct Investment are playing a significant role to attract themultinational enterprise in India. After the Indian financial liberalization at 1991, the government have beenmore concentrated to attracting MNEs through their policies like free market economy, reoriented HRDsystem, rearranged working culture, stringent quality control, allowing MNEs in all sectors apart from somesensitive areas like defence and equal opportunities parallel with local companies (Sapara, 1995). As a resultFDI in India have increased from 129 to 2843 between years 1991 to 2009(
Engardio, 2006
).However they key challenge of Indian political environment are terrorism, corruption, communal conflict andbilateral relation with neighbour countries like china, Pakistan and Bangladesh (Datamonitor, 2008).Enormous economic factors are continuously inspiring MNEs to select India for their successful outsourcing.Today Indian economy is the world’s highest emerging economy, biggest market and lowest labour cost afterChina. As a one of the fastest growing economy Indian GDP rate is 7.2%, interest rate is 3.75%, exchange rateis 44.3659% and inflation rate is also continuously decreasing ( TradingEconomics 2010) . However theinstability of GDP with monsoon, unemployment problem, shortage of energy and over-dependence in oilimports could be a great hindrance on the way of FDI in India (Datamonitor, 2008)
Figure 1
.Adopted from tradingeconomics(2010)

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