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Essay on Impact of Globalisation on the UK and Indian Information Technology Markets

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Globalisation in recent years has made the world a smaller place. Developments in information technology have allowed the world to become a single entity in economic, financial and trading terms. This change has given companies the opportunity to outsource operations to other countries or recruit staff from abroad.

This report compares the affect of globalisation on the United Kingdom and Indian economies and looks at the economic and social advantages and disadvantages of outsourcing.

It also considers the extent which government policy can influence outsourcing

The report looks at the legal implications for information technology professionals working globally.

It considers the affects of outsourcing on work practices and skill levels on the information and communication technology (ICT) industry internationally.

The report includes the ethical and social perspectives of relocating jobs to lower cost centres. Section 2 United Kingdom and India Compared

The United Kingdom is an Island of approximately 245,000 square kilometres with a population of 59 million. The average life expectancy is 75 years. The majority of the population are Christian and the main language is English.

The United Kingdom is one of the largest economies in the world. Traditionally the economic bias was manufacturing but this has been largely replaced by services including e-commerce.

Many people are better off in recent years but studies have shown that it has the second highest child poverty rate compared with other European Union countries.

The Indian Sub-continent is vast and diverse covering 3,166,000 square Kilometres. It had a population of approximately 1 billion in 2004, which represents 18% of the World's population. The average life expectancy is 55 years.

India is an explosive melting pot of different religions including Hinduism, Islam, Buddhism, Sikhism and Christianity. The majority of the population, 80%, are Hindu and there are 12% Muslim. Sikhs make up 2% of the population and the remainder other religions. Its official language is Hindu but English is the recognised as the official legal and judicial language. It has a further sixteen official languages including Tamil, Bengali and Gujarati. This variety has contributed to the racial regional and caste tensions in the country.

It is the largest functioning democracy in the World but it is also one of the poorest countries in the World. Six hundred million people live in poverty with 50% of these living on less than 60p per day.

The majority of the population, 65% live off agriculture but there are 3.5 million professionals trained technical sciences including information technology. These factors have helped India to become one of the ten largest emerging markets in the world. Section 3 Globalisation a United Kingdom Perspective

The majority of the United Kingdom's income is generated from the Services industry. This sector has a heavy reliance on IT systems and call centres to manage data and respond to customers. Globalisation allows UK companies to meet their customer needs while keeping costs to a minimum. UK companies are taking advantage of lower costs and the high number of qualified staff to either recruit from India or move support functions to India.

There is a global shortage of IT workers and despite relaxation in the immigration laws to encourage immigrants with the relevant skills Indian employees prefer to work for a short time in the UK or work in India. Companies requiring IT skills are finding they have to move to India.

One advantage for UK companies is that they will no longer be held to ransom by there IT professionals who can demand excessive salaries. UK IT employees will need to be careful not to price themselves out of the market forcing companies to seek the relevant skills abroad.

A major area being moved to India is call centres. The main advantage is cost. The salary of a call centre employee in India is one tenth of their UK equivalent. The Indian employee is often more professionally qualified than similar employees in Britain.

Traditionally call centre work in the United Kingdom is boring, repetitive work for which the rewards are poor. It is rarely a career choice and does not require formal qualifications. There are few opportunities for career progression and problems with staff retention. In India, the view is different; employees earn a good living, better than average, which means it is relatively easy to fill vacancies.

Another advantage is the workforce in India is plentiful and English is often their first language. Employment law is more relaxed and employees are willing to work twelve-hour days.

The major disadvantage of outsourcing call centres to India is that despite the call centres being more cost effective than their British equivalent there is no evidence that they are more effective. Despite companies who have outsourced such operations, claiming that the numbers of complaints are lower, public opinion suggests that Indian employees are difficult to understand and there are large discrepancies on how customers are treated. Indian call centre workers struggle to cope with different UK accents and despite training on Cultural aspects, cannot bridge the cultural differences.

Many customers are unhappy be companies relocating call centres to India partly because they are unhappy about the service they receive and secondly the affect on jobs in Britain. Companies, which have decided not to outsource, can sell themselves to potential customers by advertising British call centres. Companies who have outsourced to reduce costs may find a customer backlash could mean falling sales wiping out any savings from the outsourcing.

One major problem with globalisation is that it works both ways and many foreign IT specialists are being lured from the UK to work in India where the cost of living is cheaper are salaries offer a better quality of life.

There is also a potential security risk with large amounts of data being stored abroad. There is a high level of corruption in India and crime is global. Criminals may find it easier to obtain credit card information from outsourced centres.

Although outsourcing call centres is more cost effective at present, it is expected as more companies outsource and demand increased the cost savings will diminish at salaries and office space costs rise. Also set up costs like training can be high which means that in the short-term the India call centre may not generate expected savings.



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