demographic transition and off shoring
Post on 30-May-2018
225 Views
Preview:
TRANSCRIPT
-
8/14/2019 Demographic Transition and Off Shoring
1/22
Economic Situation by Dr. Tarun Das 1
and Offshoring- FutureLook Dr. Tarun Das, Eco.Adviser.MOF
-
8/14/2019 Demographic Transition and Off Shoring
2/22
Economic Situation by Dr. Tarun Das 2
Contents of this presentation
1. Importance of offshoring forIndia
2. Dimensions of offshoring3. Demographic transition4. Implications for offshoring5. Policy Issues
-
8/14/2019 Demographic Transition and Off Shoring
3/22
-
8/14/2019 Demographic Transition and Off Shoring
4/22
Economic Situation by Dr. Tarun Das 4
1.2 Significant Progress of Indiain IT-enabled services and BPO
Indian ITES-BPO industry recorded agrowth of 45% in 2004-05 driven byincreased offshoring by firms from USand Europe.
India emerged as the 18 th largest serviceexporter & increased its share in worldservice exports from 0.6% in 1990 to1.3% in 2003.
3. These exports were led by rapid rise of travel business, professional, andsoftware services.
4. Indian software exports increased fromonly $0.7 billion in 1995 to $17.2 billionin 2004-05 and accounted for 34% of
-
8/14/2019 Demographic Transition and Off Shoring
5/22
Economic Situation by Dr. Tarun Das 5
2.1 Dimensions of offshoring
Customer services Back office operations IT/Software operations Finance and accounting Human resource
development Knowledge servicesThese services in general
have high share of wage
-
8/14/2019 Demographic Transition and Off Shoring
6/22
Economic Situation by Dr. Tarun Das 6
2.2 Sources of BPOs
Countries like India, Brazil,China, Dominica, Israel,Philippines, Rumania, RussianFederation have witnessed asurge of Business ProcessOutsourcing catering to theneeds of developed countries.
FDI from developed countriesin the BPO sectors of thesecountries are also growing.
-
8/14/2019 Demographic Transition and Off Shoring
7/22
Economic Situation by Dr. Tarun Das 7
2.3 Benefits of BPOs
A study made by Helios Innovations(2004) indicate that reduction of operating costs is the main factor foroutsourcing.
1. Reduce operating costs-48%2. Focus on core business-32%3. Increase speed to market-5%
4. Improve quality-5%5. Conserve capital-5%6. Foster innovation-2%
7. Increase revenue-2%
-
8/14/2019 Demographic Transition and Off Shoring
8/22
Economic Situation by Dr. Tarun Das 8
3.1 Demographic Dynamics
Population of Europe, Japan andAustralia is already aged. Population of China, Hong Kong,
Russian Federation, Singapore isaging very rapidly. Population of India, Bangladesh,Indonesia, Pakistan, Malaysia isstill young and growing slowly.
-
8/14/2019 Demographic Transition and Off Shoring
9/22
Economic Situation by Dr. Tarun Das 9
3.2 Migration India, Bangladesh, Pakistan,
Sri Lanka, Thailand, Indonesiaand Viet Nam serve as a poolof migrant workers to labour
shortage countries. The number of migrantworkers from these countriesto other countries in Asia haveincreased from 1 million in1990 to 5.5 million in 2004.
-
8/14/2019 Demographic Transition and Off Shoring
10/22
Economic Situation by Dr. Tarun Das 10
3.3 Share 60+ population
in total population 2000 2050
World 10.0 21 Asia-Pacific 8.8 23
China 10.1 30
India 7.6 21Indonesia 7.6 22Japan 23.2 42
-
8/14/2019 Demographic Transition and Off Shoring
11/22
-
8/14/2019 Demographic Transition and Off Shoring
12/22
Economic Situation by Dr. Tarun Das 12
3.5 Share of 80+ populationin world 80+ population
40.449.5Rest of world
11.612.4Rest of Asia Pacific4.46.9Japan
2.04.2Russian Federation
12.78.8India
2.71.6Indonesia
26.216.6China
20502000Region/ Country
-
8/14/2019 Demographic Transition and Off Shoring
13/22
Economic Situation by Dr. Tarun Das 13
3.6 Rising share of female inaged
Figure VI
Share of male and female population aged 65+ to totalpopulation in ESCAP countries 1950-2050
Male
Female
0
2
4
6
8
10
12
1950 1975 2000 2025 2050
Years
P e r c e n
t a g e o
f t o t a l
p o p u
l a t i
o n
Share of male and female population aged 80+ to totalpopulation in ESCAP countries 1950-2050
Male
Female
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
1950 1975 2000 2025 2050Years
P e r c e n
t a g e o
f t o t a l
p o p u
l a t i
o n
-
8/14/2019 Demographic Transition and Off Shoring
14/22
Economic Situation by Dr. Tarun Das 14
3.7 Ratio of WorkingPopulation
Figure VIII: Dynamics of working age population in selected economies
Population aged 15-59 for selected Asia-Pacific economies 1950-2050
China
Asia
Pacific
Japan
Republic of Korea
India
40
45
50
55
60
65
70
1950 1975 2000 2025 2050
Years
P e r c e n t a g e
-
8/14/2019 Demographic Transition and Off Shoring
15/22
Economic Situation by Dr. Tarun Das 15
3.8 Demographic Transition inIndia
The UN puts the median age of population at 24.3 years in India,compared to 32.6 in China and 35.1 inKorea. At present, more than 50% of Indias population is under 25.
Over next 15 years, rich worldspopulation will fall slightly, whiledeveloping world will acquire 2 billionextra people. Over that period, working
population (age group 15 59) in USA willhave a shortfall of 17 million, Japan 9million, Europe 10 million (counting UK =2 mn, France = 3 mn, Germany = 3 mn
and Italy = 2 mn), Russia 6 million andChina 10 million. In 2020, India will face a
-
8/14/2019 Demographic Transition and Off Shoring
16/22
Economic Situation by Dr. Tarun Das 16
4.1 Demographic dividends forstill young economies
Increasing labour force could be animpetus to higher growth in largedeveloping countries such as India andIndonesia.
More Consumption dividend than inthe rapidly ageing economies such as Japan.
Higher return to capital in young
economies could attract FDI and otherforeign capital. Increasing opportunities to export
labour to rapidly ageing economies.
More opportunities and acceleration in
-
8/14/2019 Demographic Transition and Off Shoring
17/22
Economic Situation by Dr. Tarun Das 17
4.2 Implications forMigration Policy
Immigration worker flows have alreadyproven important in Malaysia and Thailand. For example, foreign workersaccount for 25 per cent of Malaysias
labour force. With the rapid ageing, economies suchas Japan, Republic of Korea andSingapore would experience severe
shortages in labour supply in thecoming decades. In most of the ageing economies labour
markets are not sufficiently flexible to
absorb migrant workers and to offer the
-
8/14/2019 Demographic Transition and Off Shoring
18/22
Economic Situation by Dr. Tarun Das 18
4.3 Impact on Offshoring All these developments will lead to a
pressure on wage rise at a faster speed. If wages of skilled labour in bothdeveloping and developed countries areequalized in future, offshoring may
become a victim of its own success. Developed countries may also takeprotectionist measures againstmigration and trade in services.
Many federal states in USA have tries toput up legal barriers against awardingstate contracts to non-US companies.
-
8/14/2019 Demographic Transition and Off Shoring
19/22
Economic Situation by Dr. Tarun Das 19
5.1 Policy Issues-1
India has gained significantly fromoffshoring and the WTO GeneralAgreement on Trade in Services (GATS).
There is a need to have a fresh look at
Mode-4 (movement of natural persons)under GATS. India's focus area in WTO negotiations on
GATS should be to provide effectivemarket access to its professionals andskilled labour force in many sectors andto bring about a symmetry in themovement of capital (Mode-2) andmovement of labour (Mode-4).
-
8/14/2019 Demographic Transition and Off Shoring
20/22
-
8/14/2019 Demographic Transition and Off Shoring
21/22
Economic Situation by Dr. Tarun Das 21
5.3 Policy Issues-3 For effective market access to
professionals, India should negotiate forthe following:a) Economic Needs Test should be
eliminated.
b) Social security contributions requiredfor temporary persons needs to becorrected.
c) Administration of visa regimes may bemade more transparent.
d) Specific sectoral commitments in linewith requirements of developingcountries.
h k
-
8/14/2019 Demographic Transition and Off Shoring
22/22
Economic Situation by Dr. Tarun Das 22
Thank you
-Have a Good Day
top related