Comment on the article "Can India fly?", from The Economist n 8480, 2006

Résumé du document

"Indian Business has much to celebrate", says the author of the article "can India fly?—now for the hard part", published in the june 3rd 2006 edition of The Economist. India has been recently swept by great optimism, thanks to its phenomenal economic growth. Indian GDP growth hit of 7% in 2005, which corresponds to a domestic production of 801 billion Dollars within a year. In 1991, Manmohan Singh, then finance minister (who is now India's prime minister), began a process towards the opening and the liberalization of his country's economy. It is indeed thanks to an external-payment crisis (or in reaction to it) that India implemented its unique business model, oriented to an internationalization of the tertiary sector. Nearly six decades after independence, "India at last seems ready to take the place in the world that its huge population should command", says Manish Sabharwal, boss of TeamLease, India's biggest temporary-employment agency. His euphoria is widely shared. It seems that indian business model is the path to a future world primacy, or at least to the affirmation of an emerging power to counter-balance current business scale.

Extraits

[...] In this sens, we could not realy talk about India protecting its national champions, for there is no particularly important indian firm. However, we could say India (as a governement) protects one national sector that is a world champion: service (BPO) sector. First of all because Indian Business Model was implemented in such a way it created a dependence of western companies onto India's BPO. Every and each firm in the western world nowadays produces more than goods. Along with one good come an extended line of services—that insure off-price competitiveness. [...]

[...] At the World Economic Forum, held in Davos (Switzerland), back in 2006, the slogan of the Confederation of Indian Industries seemed to put into words India's real influence: "India everywhere". Conclusion From a Business Intelligence point of view, the Indian Business Model took profit of a favorable global economic situation to use national specificities in order to achieve a predominant (in a regionla level) or an emerging (in a global level) position. However, India depends on Western economy's wealth. From this point of view, is it really secure to lay the country's economy on one single sector? Is'nt Chinas model, based on industry, a safer model? [...]

[...] One sector of the population disposes of an amazingly high level of education. India forms the world's second largest numbe of engeneers per year—more than in 380 different schools. The average age of these qualified workers is 28. Graduates join the labour market just after leaving engeneering school. Because of India's ancient ties with Great Britain, young students speak perfectly operational English. Moreover, these highly qualified workforce is cheap: the salaries range from US$ 2,500 to US$ 8,000 per year. [...]

[...] As we have seen, India has been able to take off quite sucsessfuly. The question is: how long will it be able to fly? Figures date from 2005—which does not represent a real liability for the current analysis, for it is durable aspects of Indian Business Model that we are trying to highlight. Two main particularities. This is of course a simplification, whichs objective is to ease analysis. [...]

[...] Besides, there are "captive IT operations of other multinationals, mainly banks. This model was implemented by public power. Back in 1991, Mister Singh abandonned the planned economy model left by Nehru. Government then abolished public monopolies and allowed foreign investments. India is now integrated in the global marketplace. However, much is to be done. In a ranking of 155 countries by ease of doing business in 2006, the World Bank listed India at 116, which corresponds to a rank two places below Irak! [...]