Introduction
This report section will conduct a preliminary assessment of geographic, economic, social, and political-legal factors that create global business opportunities in Indian markets. This section will also consider ways technology could create new business opportunities in India. The business chosen for this section is the information and communications technology sector due to its proliferation and reliability. The country was selected for the potential business opportunity in India because of its ample skilled human resources, affordable labor cost, language, and aspects of political and economic organization.
Potential Markets
A larger and larger percentage of business forecasts are now predicting a steady rise in the world output segment accounted for by developing nations: China, Russia, India, and others. If such trends persist, the Indian economy could become the third-largest in the world within a decade (Lee, Ga, & Sang-Gun, 2019). Such success is largely attributable to India’s information and communications technology (ICT) industry (Lee et al., 2019). The ICT industry is becoming crucial in our time, as the software use governs nearly all daily operations.
There are multiple reasons for choosing the ICT sector of the Indian market. The information technology industry accounted for around 7.7% of India’s gross domestic product (GDP) as of 2020 and is expected to increase, contributing around 10% of India’s GDP by 2025 (IT & BPM Industry in India Report, 2021). A percentage as high as this can point to this sector’s importance and long-term persistence. Furthermore, India firmly accounted for 11-12% of global ICT service exports (OECD, 2017). Thus, Indian market share invites ample investment and global collaboration opportunities.
In a mixed economy of India, the role of private companies could become increasingly important in the future. India’s top-three IT companies, Infosys, Wipro, and TCS, are projected to offer approximately 105,000 new employment opportunities soon (IT & BPM Industry in India Report, 2021). With the rapidly growing market, it makes sense for Indian companies to focus on international investments and enhance their global involvement.
Absolute and Comparative Advantages
India possesses a few factors that give it a comparative advantage in the modern age of globalization. With a high percentage of Indian graduates majoring in engineering and business, there is a large gene pool in human resource capital available for companies willing to set locations in India (TEXTBOOK, YEAR). As India has recognized the value of the IT industry early on, it has invested heavily in its development, which reflects both in business and education (Lee et al., 2019). The resulting ample skilled workforce gives India a comparative advantage over other markets.
Further, the cost of software engineer labor in the IT sector is roughly 30-40% lower compared to the United States. (TEXTBOOK, YEAR). This difference implies that producing the same services is more advantageous financially if companies choose Indian providers over American providers. Another important advantage in global trade is communicating effectively; unlike in China or other top-developing countries, many Indians are native English speakers (TEXTBOOK, YEAR). An additional benefit of directing business inquiries to India is the time-zone difference with the Western part of the world that allows for around-the-clock productivity in global business models (Arora & Rahman, 2017). Lastly, India’s political system closely aligns with social democracy, which may provide for better business conditions when compared to totalitarianism or pseudo-democracy. The companies can grow and compete more organically while benefiting from governmental support.
To conclude, providing information and communications technology services seems to be a reliable and high-profit business opportunity. The development in the ICT sector is driving many economies around the world, but the Indian economy is the most demonstrable example. India was shown to be a highly suitable place for engaging in global business investments due to its ICT-oriented market, comparatively low production prices, ease of global communication, and projected market growth.
References
Arora, B., & Rahman, Z. (2017). Information technology capability as competitive advantage in emerging markets: Evidence from India. International Journal of Emerging Markets, 12(3), 447–463. Web.
IT & BPM industry in India: Market size, opportunities, growth. (2021). [Media Report]. India Brand Equity Foundation. Web.
Lee, D. H., Hong, G. Y., & Sang-Gun, L. (2019). The relationship among competitive advantage, catch-up, and linkage effects: A comparative study on ICT industry between South Korea and India. Service Business, 13(3), 603–624. Web.
OECD. OECD digital economy outlook 2017. Web.