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Do You Think Outsourcing is Good for India? Why Are Developed Countries Opposing It? - Economics

Answer in Brief

Do you think outsourcing is good for India? Why are developed countries opposing it?

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Solution

Yes, outsourcing is good for India. The following points suggest that outsourcing is good for India.

1. Employment: For a developing country like India, employment generation is an important objective and outsourcing proves to be a boon for creating more employment opportunities. It leads to generation of newer and higher paying jobs.

2. Exchange of technical know-how: Outsourcing enables the exchange of ideas and technical know-how of sophisticated and advanced technology from developed to developing countries.

3. International worthiness: Outsourcing to India also enhances India’s international worthiness credibility. This increases the inflow of investment to India.

4. Encourages other sectors: Outsourcing not only benefits the service sector but also affects other related sectors like industrial and agricultural sector through various backward and forward linkages.

5. Contributes to human capital formation: Outsourcing helps in the development and formation of human capital by training, imparting them with advanced skills, thereby, increasing their future scope and their suitability for high ranked jobs.

6. Better standard of living and eradication of poverty: By creating more and higher paying jobs, outsourcing improves the standard and quality of living of the people in the developing countries. It also helps in reducing poverty.

7. Greater infrastructural investment: Outsourcing to India requires better quality infrastructure. This leads to the modernisation of the economy and larger investment by the government to develop quality infrastructure and develop quality human capital.

However, Outsourcing to India is good but developed countries oppose this because outsourcing leads to the outflow of investments and funds from the developed countries to the less developed countries. Also the MNCs contribute more to the development of the host country than the home country. Further, outsourcing reduces the employment generation in the developed countries as the same jobs can be done in the less developed countries at relatively cheap wages. Moreover, this leads to job insecurity in the developed countries as at a point of time jobs can be outsourced to the developing countries.

Concept: Globalisation
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APPEARS IN

NCERT Class 12 Economics - Indian Economic Development
Chapter 3 Liberalisation, Privatisation and Globalisation: An Appraisal
Exercise | Q 10 | Page 53
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