Case study

INDIA: THE EMPLOYMENT BLACK HOLE?

Group 10:
• Vũ Hoài Phương
• Nguyễn Thị Phượng
• Lâm Thị Thanh Dung
Question 1: From the perspective of American and European
companies, analyze the advantages and disadvantages of
outsourcing work in India.
Advantages
o Human resources:

+ An abundance of workers with very low wage levels.

+ Providing over 3 million college graduates a year.

=> No difficulty in finding young employees at a fraction cost.

+ The skills level of jobs is being outsourced is creasing.

+ An abundance of well- trained engineers and scientists with lower level of

salary compared with American or Europeans with the same qualification.

+ An educated workforce that can speak English.

o Techniques:

+ Software development, chip design, IT consulting, drug research and financial services are
attracted major in India.

=> The popular fields and can make a huge change in Economy.

+ Labor force who can speak English is willing to work for a fraction of wage level of
developed country workers.
Disadvantages
o India is a less developed country

+ An estimated one- third of the population is illiterate. Only Higher classes can speak English
well.

+ The official language is Hindi but not English.

+ India still possesses a very poor infrastructure, with unreliable power sourcing and
frequent flooding.

+ Government bureaucracy and India’s fiscal deficit is running at over 10 percent of GDP.
o Language issue:

+ Indian English has a different accent from American English.

 American customers complained about the ability to communicate with Indian Services .

 Dell company even moved its call center operations out of India.

+ Indian employees didn’t relate well to the concern of GE’s customers

 GE also moved its appliances call center back to America.

o Political problems

+ India has an uneasy relationship with it’s neighbor, Pakistan.

+ The tension between Hindus and Muslims produces violent conflict.

Question 2: What would you recommend to India government officials
to ensure continue job creation?

1. Simplify the Foreign Investment Law.

India should allow more foreign direct investment

• Continue with economic reforms

• Make economic reforms easier for foreign

=> Providing the free enterprise which aims for limited restrictions on trade and minimal

government intervention
2. Promoting education development and improving facilities

Because, the fact in India shows that:

• One-third of the population is illiterate

• Only high learners speak English well.

• The official language of India is not English but Hindi.

• India still owns a very poor infrastructure, with unreliable power supplies

=> With such conditions, it is difficult for the Indian government to improve

employment opportunities without changing immediately

3. Purify bureaucracy, eliminate corruption

India's fiscal deficit is above 10% of GDP.

 Such large amounts of corruption will directly affect Indian society due to the lack of

money to invest in other items, develop human resources for jobs, and so on.

4. Political stability, removing political tensions with surrounding countries, dismissing

tensions between religions because

Political tension also causes trouble. India has an uncomfortable relationship with its

neighbors, Pakistan Pakistan, and the tension between Muslims and Hindus sometimes

creates violent conflicts.

Question 3: Is it fair to workers of developed countries when companies shift
work to lower wage countries? Explain

• No, it is unfair to domestic worker in developed countries when

companies shift work to developing countries.

• Because:

• When the companies set up offshoring, it means that the demand of

domestic workers in their countries reduces. Therefore, the workers
in developed countries have to face with many difficulties, because
there is an increase in the rate of competition in looking for job.

Increasing the unemployment rate.

Question 3: Is it fair to workers of developed countries when companies shift
work to lower wage countries? Explain

• When the demand of domestic worker reduces,

therefore, the local company have more power in
recruiting workers ( because of having more options). It
can lead to a situation that the companies still hire local
worker, but they will be pay low wage.

Having negative effects on the life of domestic worker,

because the living stander in developed countries is high.
Question 3: Is it fair to workers of developed countries when companies shift
work to lower wage countries? Explain

• When looking for a job in developed countries becomes more and more
difficult, the domestic workers have a tendency to move in developing
countries to find other chances for them.

Finding some problems such as: language barrier, working environment.