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While the debate rages over whether outsourcing is a positive or negative for Western economies, here's some fresh evidence that shows why the flow of capital from developed countries to emerging markets, to which offshoring contributes substantially, is not a one way street.
While the debate rages over whether outsourcing is a positive or negative for Western economies, here's some fresh evidence that shows why the flow of capital from developed countries to emerging markets, to which offshoring contributes substantially, is not a one way street.Over the past year, India, for the first time, has emerged as a net investor in the United Kingdom. That is, more new foreign direct investment now moves from India to the U.K. than vice versa, according to a report in The Times of London.
India invested about $1 billion in new developments in the U.K. last year, with a bit less going the other way. The Times' source was Kamal Nath, India's Commerce and Industry Minister. Meanwhile, trade between the two countries reached $10 billion in 2005, up 25% from the previous year.
This whirl of economic activity is helping to create jobs not just in India, but also across Great Britain. Indian industrial giant Tata Group, for instance, is building a $6 million development center near Coventry that could employ up to 1,000 workers. Its IT services cousin, TCS, already has eight offices and a development center in the U.K. Wipro Technologies has operations in Reading. These are just a few examples of Indian companies that are creating jobs in places other than India.
It's the same story in the U.S., as more and more Indian IT and industrial companies establish local operations to better serve their growing Stateside customer base.
Outsourcing has helped spur much of this as it has given many Indian companies a base on which to build. As a result, a good number of them are now going beyond being low-cost body shops and are becoming global players that are investing worldwide--and creating jobs worldwide.
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