China to Dominate Outsourcing Sector

Global Recession is playing a major role in the evolution of Outsouring sector. According to research conducted by Professor Arie Y.Lewing from Centre for International Business Education and Research (CIBER), Offshoring activity is witnessing a prominent change. Companies in order to cut down their cost at the time of Worst Economic crisis will ultimately go the way of Outsourcing. Though companies perceive it as a form of cost-cutting tool they perceive it as important Business strategy.

With Barack Obama to be soon taking charge of Presidentship, this sector may undergo lot many changes in the wake of US Subprime Mortgage crisis.

China will be a dominant factor in Outsourcing business due to their edge in Product Development area which is the area where 50% offshoring is carried in 2008. Companies perceive China as best Offshoring place because of their Industrial Advancement. Though China is not perceived to dominate because of lack of English speaking skills in theri working population, the above reason overthrows this factor to favour China.

According to survey, clients in US are seeking more cost-reduction which affects Indian Outsourcing Industries which has relatively less share in “Product Development” area compared to China. Due to some clients seeking Financial support, Indian Outsourcing companies have more financial constraints at this juncture.

Foreign Direct Investment fall

Topic: FDI inflows may fall short of the target

Economic slowdown in both the developing and the developed countries, the rising inflation rates touching a high of 11.05% in past 13 years due to rising oil prices which touched a new high of $140 per barrel which is double compared to $70 per barrel in August 2007 are the main reasons for the failure to achieve
the target of $35 billion in current fiscal.

The above main two reasons along with other reasons like huge volatality in the stock market, low infrastructure investments, failure on governments side to strike a deal between U.S regarding Nuclear deal will result in the failure to achieve target by $7-8 billion as predicted by CEO’s of leading companies,
in a meet organised by Associated Chambers of Commerce and Industry of India(Assocham).

Finance Minister P. Chidambaram has proposed a request to oil producing countries to increase production which will stabilize the oil price in Internaional Market. He advocated a new mechanism “Price band mechanism” according to which there is high end and also a low end between which the prices are bound to
fluctuate so that both the producers and the consumers will not be affected too much by price rise.

According to Sajjan Jindal the Assocham President the domestic industry profitability would come down by 15-20% due to insurmountable inflation rate.In the previous fiscal the FDI inflows were estimated to be $25 billion as against the expected flow of $30 billion.   

Property v/s other Investment Portfolio

Topic: Property v/s other Investment Portfolio