The Globalization Of Services

Many refer to the globalization of services as the second wave of globalization.
Services include things like call centres, advertising companies, financial services etc.
Originally the offshore outsourced work were basic goods manufacturing tasks that were repetitive and uncomplicated, now with the globalization of services it is off-shoring more specialized tasks, not only call centres but examples include legal firms off shoring litigation and patent research.
In recent years the most popular destination for outsourcing services has been India, in particular the state of Karnataka where Bangalore is situated, it is referred to as India's 'silicon valley'. Behind India in the GSLI are other emerging countries such as china and malaysia. The GSLI ranks countries that are the best destinations for outsourcing goods to based on factors such as people skills and costs.

Case Study: INDIA - Karnataka

India is top of the GSLI, although the capital is New Delhi, it is Bangalore located in Karnataka that is the most important IT centre. There is a population of 8.4 million in Bangalore and is referred to as the 'silicon valley' of India. The service sectors contribution to GDP has increased from 15% in 1950 to over 50% now. India is a very attractive place to outsource services due to many factors:

• 2nd largest English speaking population in the world
• low cost but high quality and adaptable workforce
• investment-friendly and supportive government policies
• 3rd largest brain bank in the world - around 2.5 million technical professionals
• well developed infrastructure and communications

Karnataka has historically been a place for technology and R&D based institutions. It was the first state to set up engineering colleges and a university of technology. Other things giving Bangalore a competitive advantage include:

• Best telecoms infrastructure in country due to existing technlogy parks such as Myosore and Hubli. 
• A specialized industrial park, Electronic City, has been built and spreads over 1.3 KM^2. 
• technology universities

Bangalore has experienced growth of around 10% per annum and now has India's third highest GDP per capita. This is due to domestic investment such as the opening of an airport in 2008 but also the influx of FDI from countries such as HSBC, Google and Yahoo. 

However, despite its attractiveness India faces many future problems in maintaining its position. These include:

• Competitions from cheaper places such as Vietnam and Phillipines
• Wages are rising and so are other costs like rent, there is inflation
• Many firms are moving call centres back to the UK due to customer complaints.