Question

India has certain advantages which make it a favourite outsourcing destination. What are these advantages?

Answer 1

The following points qualify India to be the favourite spot for outsourcing by various MNCs. 

1. Easy Availability of Cheap Labour: As the wage rates in India are comparatively lower than that of in the developed countries, MNCs find it economically feasible to outsource their business in India. 

2. Reasonable Degree of Skills: Indians have fairly reasonable degree of skills and techniques that need low training period and, thus, low cost of training.

3. International worthiness: India has a fair international worthiness and also credibility.. This enhances the faith of the foreign investors in India. 

4. Virgin Market: India has a virgin market for produced goods and services. This not only helps the MNCs to explore the wide domestic market of India but also conquer the international market as the cost of production in India is relatively cheaper.

5. Stable Political Environment: The democratic political environment in India provides a stable and secured environment to the MNCs to expand and grow.

6. Favourable Government Policies: The most important point that makes India as the most favourite spot for outsourcing is the favourable government and tax policies. MNCs gets various types of lucrative offers from the Indian government like tax holidays, low rate of tax, easy tax policies, etc. All these policies enable the MNCs to retain a major portion of their earnings in the form of savings that they can invest to grow and expand their business. 

7. Lack of Competitive Competitors: The most important for the MNCs in India is that they don’t face stiff competition from the Indian domestic industries. This almost enables them to enjoy a monopoly status in the Indian markets.

8. Reasonable Degree of Infrastructural Investment: Indian government has invested heavily in the past two decades in the infrastructural sector. Various steps have been taken for connecting remote and rural areas to the metropolitan and other major cities. This has not only reduced the cost of production of the MNCs but also helped them operate efficiently and effectively. 

9. Cheap and Abundant Availability of Raw Materials: India is well enriched in natural resources. This ensures the MNCs cheap availability of raw material and undisturbed and perennial supply of raw materials. This enables proper and smooth operation of MNCs.