Circular Logic: Reinvesting Global Sourcing Windfalls

With apologies to a good friend with a blog by the same name, I find the "circular logic" of this story in Business Standard amusing and refreshing. For anyone wondering where supplier profits from global sourcing efforts can go, look no further. According to the article, "In a reversal of the trend where British firms took operations to India, it is the turn of Indian companies to set up shop in the UK, which receives 60 per cent of all Indian investment in Europe. Over 430 Indian firms based in London account for 30 per cent of all foreign investment in the capital and more are queuing up." Not only are Indian firms launching and acquiring operations in the UK as growth investments, they are also building near-shore operations to better serve their customers. To prove this point, the article in Business Standard refers to how "Indian companies are now employing British nationals in call centres based in the UK to do the same jobs [as they could in low cost regions] ... ICICI One-Source, a Mumbai-based outsourcing company, last week announced it would build a 1,000-people call centre in Belfast, its first in the UK."

There's no doubt that India stands to benefit tremendously from the growth of global sourcing in the coming years. But the fact that so many Indian firms are choosing to reinvest their profits in the West to more effectively serve their customers is a long-term bet that fewer Chinese companies are making -- at least at this early point in the world trade game. To complete this circular irony, perhaps the Indian government will tax the profit from these foreign-owned ventures to help replace its now crumbling infrastructure and squalid slums, much of which still dates back to what British originally constructed when Bombay was at the center of their global trade empire.

Jason Busch

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