A. Macro- The major macro problems are surrounding the loss of the tax abatement in India as well as the weakening US dollar. Both of these issues make it incredibly expensive to do business in India compared to other locations like the Philippines.
B. Micro- In India the transportation and infrastructure costs continue to hurt the bottom line.
II. Causes- Tax abatement ended in 2009, transportation and infrastructure costs are not going away and other countries have more attractive incentives to bring in higher margins.
III. Systems affected- The whole upswing in bringing BPOs into India has been affected, it is no longer that attractive to bring your business ...view middle of the document...
The credit crunch and declining US dollar has forced companies to look overseas where they are able to reduce labor costs while at the same time find very skilled workers.
2) Referring to this chapter and this case, discuss the general trends in the globalization of human capital?
Transferring business to other countries outside the US has become the trend because often times it is much cheaper and sometimes the service and skill set of the work force is better than at home. Most companies have to play on the global field in order to remain profitable and what better way than to hire and train employees from the country you are moving operations into. This hiring of local human capital can pay dividends and add instant credibility to your company and provide a smoother transition into said country. India cost per employee has risen which has shifted many companies to look to the Philippines where it is much cheaper to employ while still keeping a highly educated and skilled workforce.
3) What are the effects of the Indian government policies on the Indian BPO industry and on MNC decisions regarding locations for outsourcing jobs?
The Indian government worked hard to introduce initiatives to attract new companies into India for BPO’s, but the economic downturn has made it more expensive to remain in India due to the...