Two Notable Success Stories
1. India
Outsourcing of information technologies consulting and business management has been substantially impactful on India’s national socioeconomic situation. The relevant multinational entities continue finding great incentive in continuing investment in Indian businesses, which have been very successful in establishing a workforce capable of offering high-quality service (Chandler & Zainulbhai, 2013). The Indian GDP has grown profoundly with the influx of information technology jobs, particularly with the services sector emerging to constitute approximately 50%. In comparison, the agricultural sector comprised 23% and the industrial sector comprised of 26% of the GDP as of 2003. In this same year, the GDP grew by a remarkable 8.1% - more than double its growth rate just three years prior. The information technology sector, on average, has exhibited relatively stable growth by 46% per year since 1993 (Sharma, 2015).
The rapid development of the information technology sector, as predicted exactly by my theory, has put significant pressure upon the country to develop higher education and specialized training programs. A competent workforce, after all, is critical for the continued growth of this trend. The two major relevant entities operational in India, Infosys and Wipro, constitute of over 40 000 employees. Now consider the fact that over 70 foreign entities of a similar nature are also concurrently operational in India. Individuals with a post-secondary background are naturally given preferential employment. This also has some sort of a psychological incentive – if individuals are aware of the potential benefits (e.g. better standard of living, quality of life) associated with the job opportunities presented by these multinational companies, they have further incentive to work harder and pursue higher education. With time and across an entire population, this fundamental psychological effect can be pivotal towards socioeconomic revitalization (Chandler & Zainulbhai, 2013, Rosenthall, 2004 & Sharma, 2015).
In the case of India, the growth of the technologies sector has been correlated with the growth of the middle class. The influx of jobs and money has given more buying power to a progressively growing class of people. Income disparity has been cut by an estimated 10%, a figure that can be forecasted to continually rise with further economic development of the country (Sharma, 2015).
2. The Philippines
Between the years of 1960-2012, the Filipino agricultural sector underwent a period of steady downturn. This was, interestingly, not compensated by industrialization as is typical with countries, but rather a quickly developing services sector. By 2012, the Filipino gross domestic product (GDP) could be broken down as follows: (i) the services sector comprising 57.1%; (ii) industrials comprising 31.1%; and (iii) the agriculture sector comprising 11.8%. 52.5% - over half - of the workforce during this year was also affiliated with the services sector. The Philippines, since that time, has recovered relatively well from the economic stagnation, however it is still lacking – a World Bank report from 2014 ranked the Filipino economy 108th position out of the 189 considered. Externalizing tasks for transnational entities is one of the ways that the economy is being sustained (Lee et al., 2014).
First of all, transnational companies have great incentives to seek opportunity in the Philippines. 62% of the population is within the typical working age, i.e., 15-64, and 95.4% of the nation’s population is literate with 28% of the workforce having background in tertiary education. Furthermore, the Philippine’s colonial history includes colonization by America. A large fraction of the population, therefore, is fluent in English. The Filipino accent is also preferable over its Indian counterparts, as it is distinctively more neutral. These transnational companies began to come in during the 1980s, to establish data processing services for companies such as Sony and Boeing. Quickly, animation companies began to pursue the bandwagon as well, with Burbank Animation Incorporated outsourcing in 1983. By 1988, large, well-developed commercial entities began establishing themselves in the Philippines, such as Fil-Cartoons (Hinkelman, 2008).
From 2007 and 2012, the information technology business processing outsourcing (IT-BPO) sector grew exponentially, with revenues continually bolstered by a 25.3% compound rate on an annual basis. Within this time frame, (i) outsourcing industry revenues grew from 4.3 billion USD to 13.4 billion USD; (ii) direct employment in the sector grew from 272 000 to 770 000; and (iii) the sector’s indirect employment grew from 600 000 to 2 000 000 (Lee et al., 2014).
One of the net effects of this would be the restoration of peace to Davao City, a Filipino municipality internationally well-known as a site of armed conflict between the government and the Moro National Liberation Front. The city’s otherwise educated, English speaking and disciplined citizens, however, have continued to attract multinational companies into that region, particularly those pertaining to the IT-BPO sector. Due to the influx of money, the police force was able to be strengthened exponentially and the region now has a foundation of peace and stability (Lee et al., 2014).
In the case of the Philippines, not only have the activities of transnational companies been proved critical towards economic revitalization, job creation, workforce productivity and ultimately, socioeconomic equality, however they have also proved the criticality of economic development towards maintaining peace. Not only does outsourcing bring an influx of goods and jobs into developing countries, however can serve to be an important countermeasure against conflicts, which can perpetuate patterns of stagnation.
Outsourcing of information technologies consulting and business management has been substantially impactful on India’s national socioeconomic situation. The relevant multinational entities continue finding great incentive in continuing investment in Indian businesses, which have been very successful in establishing a workforce capable of offering high-quality service (Chandler & Zainulbhai, 2013). The Indian GDP has grown profoundly with the influx of information technology jobs, particularly with the services sector emerging to constitute approximately 50%. In comparison, the agricultural sector comprised 23% and the industrial sector comprised of 26% of the GDP as of 2003. In this same year, the GDP grew by a remarkable 8.1% - more than double its growth rate just three years prior. The information technology sector, on average, has exhibited relatively stable growth by 46% per year since 1993 (Sharma, 2015).
The rapid development of the information technology sector, as predicted exactly by my theory, has put significant pressure upon the country to develop higher education and specialized training programs. A competent workforce, after all, is critical for the continued growth of this trend. The two major relevant entities operational in India, Infosys and Wipro, constitute of over 40 000 employees. Now consider the fact that over 70 foreign entities of a similar nature are also concurrently operational in India. Individuals with a post-secondary background are naturally given preferential employment. This also has some sort of a psychological incentive – if individuals are aware of the potential benefits (e.g. better standard of living, quality of life) associated with the job opportunities presented by these multinational companies, they have further incentive to work harder and pursue higher education. With time and across an entire population, this fundamental psychological effect can be pivotal towards socioeconomic revitalization (Chandler & Zainulbhai, 2013, Rosenthall, 2004 & Sharma, 2015).
In the case of India, the growth of the technologies sector has been correlated with the growth of the middle class. The influx of jobs and money has given more buying power to a progressively growing class of people. Income disparity has been cut by an estimated 10%, a figure that can be forecasted to continually rise with further economic development of the country (Sharma, 2015).
2. The Philippines
Between the years of 1960-2012, the Filipino agricultural sector underwent a period of steady downturn. This was, interestingly, not compensated by industrialization as is typical with countries, but rather a quickly developing services sector. By 2012, the Filipino gross domestic product (GDP) could be broken down as follows: (i) the services sector comprising 57.1%; (ii) industrials comprising 31.1%; and (iii) the agriculture sector comprising 11.8%. 52.5% - over half - of the workforce during this year was also affiliated with the services sector. The Philippines, since that time, has recovered relatively well from the economic stagnation, however it is still lacking – a World Bank report from 2014 ranked the Filipino economy 108th position out of the 189 considered. Externalizing tasks for transnational entities is one of the ways that the economy is being sustained (Lee et al., 2014).
First of all, transnational companies have great incentives to seek opportunity in the Philippines. 62% of the population is within the typical working age, i.e., 15-64, and 95.4% of the nation’s population is literate with 28% of the workforce having background in tertiary education. Furthermore, the Philippine’s colonial history includes colonization by America. A large fraction of the population, therefore, is fluent in English. The Filipino accent is also preferable over its Indian counterparts, as it is distinctively more neutral. These transnational companies began to come in during the 1980s, to establish data processing services for companies such as Sony and Boeing. Quickly, animation companies began to pursue the bandwagon as well, with Burbank Animation Incorporated outsourcing in 1983. By 1988, large, well-developed commercial entities began establishing themselves in the Philippines, such as Fil-Cartoons (Hinkelman, 2008).
From 2007 and 2012, the information technology business processing outsourcing (IT-BPO) sector grew exponentially, with revenues continually bolstered by a 25.3% compound rate on an annual basis. Within this time frame, (i) outsourcing industry revenues grew from 4.3 billion USD to 13.4 billion USD; (ii) direct employment in the sector grew from 272 000 to 770 000; and (iii) the sector’s indirect employment grew from 600 000 to 2 000 000 (Lee et al., 2014).
One of the net effects of this would be the restoration of peace to Davao City, a Filipino municipality internationally well-known as a site of armed conflict between the government and the Moro National Liberation Front. The city’s otherwise educated, English speaking and disciplined citizens, however, have continued to attract multinational companies into that region, particularly those pertaining to the IT-BPO sector. Due to the influx of money, the police force was able to be strengthened exponentially and the region now has a foundation of peace and stability (Lee et al., 2014).
In the case of the Philippines, not only have the activities of transnational companies been proved critical towards economic revitalization, job creation, workforce productivity and ultimately, socioeconomic equality, however they have also proved the criticality of economic development towards maintaining peace. Not only does outsourcing bring an influx of goods and jobs into developing countries, however can serve to be an important countermeasure against conflicts, which can perpetuate patterns of stagnation.