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IB
IB
Presented By :Bhuvan Chugh Aman chauhan Manoj kumar Jai krishna Sneha gupta Abhishek Bhandari Mayank shukla sumiti saurav
Factor Mobility
Factor mobility refers to the ability to move factors of production - labor, capital or land - out of one production process into another.
We can use the porters diamond model to show the rise of Indian IT/BPO industry:
Demand Conditions : There has been a great demand from the US and other countries in the west for IT products and services in India. One of the reasons was the low cost of the same. We have a high availability of inexpensive and skilled labour force which has contributed to the growth of IT/BPO sector in India. Factor Conditions: The factor conditions in India have been favorable for the rise of the IT/BPO industry. Presence of skilled workforce and software professionals along with moderate capital requirement and operational cost has been an advantage for the industry. There has been great emphasis on engineering education in India. This has contributed a large number of IT professionals in India.
Related and supporting Industries: India has benefited from the excellent satellite connectivity and presence of telecom infrastructure. Internet penetration and usage has increased a lot in the past decade. All these have contributed to the growth of the industry.
policies, entry barriers are almost nil in the software industry. This has lead to increase in number of firms working in this field. Increasing large number of IT/BPO companies are present in the market and thus make the market competitive.
Inexpensive Labor Highly skilled Workforce Acceptance of English among working class. High level of Importance given to Education Giant International Market Low political Risk Innovation and knowledge management Presence of cluster in Bangalore, Hyderabad , etc. Entrepreneurial skills
For the IT industry in Particular, India has competitive edge because of following factors :
Abundant, skilled , English speaking manpower. High- end telecom and Infrastructure which is at par with the global standards. A friendly tax structure. Proactive and positive policy environment 24 * 7 services
A sophisticated BPO sector has already been serving variety of industries as financial services, retail and manufacturing.
The factor conditions in Latin America are as follows:1. Land- Comparatively low real estate rate making it attractive, cost wise. 2. Labour /Human Resource : - Young population ( between 15-39) - Low wage rate - Higher unemployment and lower attrition - Available workforce
3. Capital - Not very mobile - Level of consumer Debt among the Latin American middle class is much less than that of developed countries. - Banking system can be regarded stronger and more stable
4. Infrastructure - Favorable Real estate rates - Brazil, Argentina and Uruguay have worked towards developing their infrastructure such as roads, electricity, etc.
5. Level of Technology Use of technology and scientific research is not very advanced. 6. Education Secondary school and higher education enrollment, technical education are major weaknesses. 7. Location - Less Travel time for U.S based clients - Similar Time zones - Quicker Implementation - Higher control over operations by clients - Ability to provider services in real time 8. Culture - cultural similarities - physical proximity - cultural values closely resemble - easier for customers to adapt to social environment of Latin America
Attrition: Higher unemployment and lower attrition. Annual attrition rate in Latin America ranges from 15%-35% which is comparatively lower than in India. Regional stability : Political and Economic stability in countries like Argentina, Colombia, Chile.
Q.3 How are Indian IT companies leveraging factor conditions in Latin America?
1. Lower cost of operations 2. Low attrition rate reduces cost of hiring and training new employees. 3. Regional stability 4. Availability of skilled, technical and scientific manpower at lower rate. 5. Real time service to American clients 6. Time zone advantage
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