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India

Basic information

Capital: New Delhi
Population: 1.130 bn.
Large cities: Bombay, Bangalore, Calcutta
Currency: Indian Rupee
Languages: Hindi and English
Government: Parliamentary Federal Republic
Time zone: UTC+5:30
GDP: $ 1000 bn.
Dialling code: +91
Internet TLD: .in

Overview India

Thanks to the continuing strong economic growth (8 % on average in the last five years) and the strong Rupee, the Indian national economy was  able to reach the 1 billion US $ threshold in April 2007. Long-term growth prognoses assume that with its presently 1.1 bn. inhabitants, by 2050 the country will generate a GDP that can then only be surpassed by China and the US.
In the fiscal year of 2006/07, the average per-capita income amounted to ca. 724 US $. However, major regional differences must be taken into account when reading this figure: Differences between an emerging urban middle class and the (mainly rural) poor, which still make up about 70 % of the country’s population.

The gradual deregulation and opening up of the Indian national economy initiated in 1991 formed the prerequisite for the continuing strong growth. The service sector with its steady above-average growth rate (2006/7: 11 %) generates more than half of India’s GDP (55 %).
The domestic private economy, which made 79 % of all investments in the past fiscal year, constitutes the growth engine. Some Indian family businesses have grown to be globally acting companies within just one generation.

German companies, too, consider India and its strong rate of econoimc growth to be the market of the future that has the strongest potential – second only to China. Other than in China, however, in India it is the domestic market that spurs the deveIopment.

Due to the future potential of the enormous Indian domestic market, the inflow of foreign direct investments of US $ 16 bn. in the fiscal year 2006/7 was almost three times as high as that in the previous year (US $ 5.5 bn.).

IT and electronics, the service sector, the transport industry (mainly cars) and the energy sector are the sectors with the highest foreign investments (since 1991). 

 

Overview IT provider market

India succeeded in developing the most comprehensive range of outsourcing services and is thus regarded as the core country of IT outsourcing, as. Services range from simple data entry, customer specific application development, application management, and IT operations to consulting services beyond the local market. Moreover, India’s particular strength lies in Business Process Outsourcing (BPO) – call centres, for example, or the processing of standard procedures such as salary accounting. Because of the sum total and degree of maturity of its outsourcing competence, India has risen to be the leader among offshore IT and BPO providers, so that a certain standard may be assumed when speaking of Indian outsourcing.
 
The conditions of Indian companies are still on a good to average level (€ 20 to 55). In recent years, however, a rapid price increase to high fluctuation rates has been noted. According to a study by McKinsey, the costs for a software developer have risen by 13 % in 2006, and in the case of the much sought-after project managers, an increase of 23 % can even be recorded.
The Indian staff market is known for its large pool of well-trained personnel and offers a very good choice of qualified resources for the IT industry. As already indicated previously, however, there is an increasing excess demand for labour on the Indian staff market. At present, the results are a fluctuation between 20 % and 40 %, a boost in average hourly rates, and an increased risk for the German outsourcing customer. There is a high probability that the carefully set up resources and the know-how-carriers may not be available for a long-term committment.

India continues to invest in University training in order to be able to respond to the vast demand for qualified staff in the IT industry. At present, around 100,000 graduates leave the Universities each year, heading for employment in the IT industry.

In addition to the advantages discussed so far, other factors recommending India are the existing legal system which is based on that of Great Britain, and the good English language skills of Indian IT employees. One needs to be aware, however, of the cultural differences which are probably due to the caste system, as well as failed projects and long-term outsourcing projects which did not stand the test and in some cases led to a negative image. 

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