Initially you might have associated any ‘outsourcing to India’ related news to cost-savings. And then, Indian companies were quick to shift their strategy and laid emphasis on skilled workforce for client-wins. Now, the call centre capital of the world has moved ahead further, as Indian companies are becoming multinational with delivery centres and operations in prime locations such as U.S., Canada, U.K. etc., either through acquisitions or fresh investments.

Even the scions of Indian industry such as Aditya Birla Group, one of the oldest and largest business houses of India with diversified interests in cement, textiles, commodities and telecom, recently acquired Canada's largest business process outsourcing (BPO) company Minacs Worldwide Inc., to get the onshore capability with 6,000 employees of Minacs in North America. ICICI OneSource, India's fifth-largest BPO company, has recently opened its two U.K. outsourcing centres—first in Belfast, the capital city of Northern Ireland, and the second one in Londonderry. These two centres not only provide ICICI OneSource a base closer to its clients, as it earns about 50% of its outsourcing revenue from the U.K., but also create more than 1,000 jobs for the local community.

Not only have investments by Indian companies abroad created jobs there, but also outsourcing to India has helped other countries in creating jobs. Since the turn of the millennium, some 30,000 formerly British jobs have been offshored each year. But these job losses are offset by job gains, and they should also be viewed in the context of the 250,000 net new jobs created in the economy during the same period, according to Chartered Institute of Personnel and Development, U.K.’s leading Human Resource Management Organisation.

Indian investment in the U.K. has gone up 111% to 76 projects, creating almost 4,000 jobs during 2005-06, according to the latest figures released by U.K.’s Department for Trade and Industry (DTI). India has emerged as the third largest overseas investor in the U.K., as Indian companies invested £1.02 billion (about $2 billion) there during the year. India’s second-largest BPO company WNS Global Services already has a centre in Ipswich, U.K., while HCL BPO, India’s fourth-largest BPO company, also has a centre in Belfast. Progeon, an Infosys subsidiary, and seventh-largest BPO company of India, has a centre in Brno, Czech Republic. Tata Consultancy Services Limited (TCS), the largest IT services company of India, has a presence in 34 countries across 6 continents, thanks to its organic as well as inorganic growth. Aren’t we talking about Indian MNCs? I can not help but wonder why outsourcing is still considered a ‘dirty’ word.

India integrating more and more with the world economy

We foresee the trend growing stronger and spreading across a number of sectors such as pharmaceuticals, auto-parts, oil & gas etc. A recent survey by the Economist Intelligence Unit (EIU), an Economist Group business and publishers of The Economist Newspaper, clearly indicates that India’s contribution toward global economic growth is set to rise.

The survey has predicted that India will contribute 12.2% to global economic growth by 2020. India's share in the global GDP will rise from 6.2% in 2005 to 8.8% in 2020. The study projects India as one of the fastest growing economies, and predicts that by the year 2020 India as a trading nation will record the biggest jump in world ranking from 24th to 10th. India, China and the United States will account for more than 50% of all new growth over the next 15 years, according the EIU survey. India will account for 142.4 million of 471 million net new workers during this period, followed by China with 65 million and the United States with 12.5 million, and India's GDP will have overtaken or be on the threshold of overtaking the biggest European economies.

Special Economic Zones: Convergence of tax incentives and growth

India’s integration with the world economy has been a two-way process. While the Indian companies have started going global, the Indian government is giving full thrust on inviting foreign investors to India. It has approved new rules for creating Special Economic Zones (SEZs), which allow 100% foreign direct investment (FDI) except for activities under the negative list and offer tax exemptions for 15 years. Under the new SEZ laws, the developer of the SEZ will get Income tax exemption for a block of 10 years in 15 years and exemption from service tax also. The units in SEZs will also be 100% exempt from corporate income tax for the first five years, 50% exempt for the next five years and, for the final five years, 50% of the profits reinvested will be exempt from tax.

SEZs when operational are expected to offer high-quality infrastructure facilities and support services, besides allowing for the duty-free import of capital goods and raw materials. Additionally, a lot of attractive fiscal incentives and simpler customs, banking and other procedures are offered in such zones that attract foreign as well as domestic entrepreneurs. Till now, the government has already accepted more than 100 applications for SEZs since the new SEZ laws were approved in February 2006, and has given a go-ahead for around 17 SEZs to be set up in the private sector or the public-private partnership.

India has been doing its fair share to ensure that world class services are available to any person at any time and any place. We have worked on creating an infrastructure necessary to deliver these services. We are confident that Indian companies will emerge as a force to reckon with in the near future and they are already making their presence felt around the globe.