A PRESENTATION ON

GLOBALIZATION &
OUTSOURCING AND
CHALLENGES OF 21ST
CENTURY

By –
Abhishek Sharma
Vineet Maheshwari
WHAT IS GLOBALIZATION

Diana’s death- An English princess with an

Egyptian boyfriend in a German car driven by
Dutch driver crashes in a French tunnel while
being chased by Italian paparazzi on
Japanese bike treated by Portuguese doctor
with brazilin medicine .This is a message
which was written by an Indian on a Chinese
phone smuggled by a Pakistani via Nepal. This
is Globalization .Strange but true!
 DEFINITION

It refers to the integration of economies of

the world through uninhibited trade and
financial flows, as also through mutual
exchange of technology and knowledge.
Ideally, it also contains free inter-country
movement of labour.
 FEATURES
 Opening up of world trade,

 Development of advanced means of communication,

 Internationalization of financial markets,

 Growing importance of MNC’s,

 Population migrations and more generally increased

mobility of persons, goods, capital, data and ideas.

 Infections, diseases and pollution.

 INTEGRATION OF ECONOMIES
The increasing reliance of economies on
each other

The opportunities to be able to buy and

sell in any country in the world

The opportunities for labour and capital

to locate anywhere in the world
Stock Markets are now accessible
from anywhere in the world!

The growth of global markets in finance

INTEGRATION OF ECONOMIES
 Made possible by:

 Technology
 Communication networks
 Internet access
 Growth of economic cooperation – trading blocs
(EU, NAFTA, etc.)
 Collapse of ‘communism’
 Movement to free trade
 CORPORATE EXPANSION
Multi-national or trans-
national corporations
(MNCs or TNCs) –
businesses with a
headquarters in one
country but with
business operations in a
number of others.
No matter where you go in the
world, certain businesses will
always have a presence.
 CORPORATE DOMINATION

Key Issues:
Damage to the
environment?
Exploitation of
labour?
Monopoly power
Economic
degradation
Non-renewable Shell and Nike’s activities have come
resources under severe criticism

Damage to
cultures
 OTHER ISSUES:
Accountability
of Global businesses?

Increased gap between rich

and poor fuels potential
terrorist reaction

Ethical responsibility of
There are plenty of people
who believe that globalisation
business?
is a negative development,
protests at the G8 summits,
pollution, poverty and concern
Efforts to remove trade
over GM crops are just some barriers
of the issues.
 IN CONTEXT TO INDIA

Opening up the Indian economy to FDI by

providing facilities to foreign companies to
invest in different fields of economic activity
in India, removing constraints and obstacles
to the entry of MNCs in India, allowing Indian
companies to enter into foreign
collaborations and also encouraging them to
set up joint ventures abroad.
THE IMPORTANT REFORM MEASURES
(STEP TOWARDS GLOBALIZATION)
 Devaluation: The devaluation of Indian
currency by 18-19 % against major currencies
in the international foreign exchange
market.

 Disinvestment: Most of the public sector

undertakings have been sold to private
sector.
 CONT..
 Dismantling of The Industrial Licensing
Regime : No industrial approval is required
from the govt. for locations not falling within
25 kms of the periphery of cities having a
population of more than 1 million.

 Allowing FDI : The Department has opened to

foreign investment on automatic route without
any limit on the extent of foreign ownership.
CONT.

 Throwing Open Industries Reserved For

The Public Sector to Private Participation.

 The removal of quantitative restrictions on

imports.
 CONT..
 Non Resident Indian Scheme:Government has
extended some concessions specially for NRIs and
overseas corporate bodies having more than 60%
stake by NRIs.

 The reduction of the peak customs tariff: Over

300 % prior to the 30 % rate that applies now.
 IMPACT OF GLOBALIZATION
 Overall growth rate of the Indian economy

 Growth in 70’s- 3%,

80’s- 5.6%
 From 8th position in 1991 to 4th place in 2001.
 During 1991-92 the first year of Rao’s reforms program,
The Indian economy grew by 0.9%only.
 Gross Domestic Product (GDP) growth accelerated to
5.3 % in 1992-93,
and 6.2% in 1993-94
 A growth rate of above 8% was an achievement by the
Indian economy during the year 2003-04.
Structure of the Economy (Percentage)

Foreign Trade (Export- Import)

 Thus we find that the economic reforms in
the Indian economy initiated since July 1991
have led to fiscal consolidation, control of
inflation to some extent, increase in foreign
exchange reserve and greater foreign
investment and technology towards India.

 Presently more than 100 of the 500 fortune

companies have a presence in India as
compared to 33 in China.
INDIAN ECONOMY: FUTURE
CHALLENGES
 Achieving an annual average growth of
9-10 % in the next five years.

 Simplifying procedures and relaxing entry barriers for

business activities.

 Checking the growth of population- India is second

highest populated country.

 Boosting agricultural growth through diversification and

development of agro processing.

 Expanding industry fast, by at least 10% per year

 Developing world-class infrastructure for
sustaining growth in all the sectors of the
economy

 Allowing foreign investment in more areas.

 Some regard globalization as the spread of

western culture and influence at the expense
of local culture. Protecting domestic culture
is also a challenge.
 Global corporations are responsible for global
warming, the depletion of natural resources,
and the production of harmful chemicals and
the destruction of organic agriculture.

 Empowering the population through universal

education and health care.
OUTSOURCING
Sourcing your operations to a qualified
external entity through a contract, thereby

– Improve efficiency in core processes

– Increase profits
– Invigorate growth
– Innovate products
- Improve shareholder Value
– Insulate from risk
WHY OUTSOURCE TO INDIA
 Availability of qualified resources – industry
standard certifications
 Technology and business skills
 Cost and quality arbitrage
 Strong and ethical Entrepreneurs
 Better tax structures - SEZ
 Economy on the growth path – GDP
 Enthusiastic and young population
CONCLUSION
 A country must carefully choose a combination of policies that
best enables it to take the opportunity - while avoiding the
pitfalls.

 For over a century the US has been the largest economy in the
world but there has been a shift of focus from the US and the
rich countries of Europe to the two Asian giants- India and
China.

 Economics experts and various studies conducted across the

globe envisage India and China to rule the world in the 21st
century.

 India fourth largest economy in terms of purchasing power

parity, may overtake Japan and become third major economic
power within 10 years.
THANK YOU