Effects of Outsourcing
Impact on India
The effect of the outsourcing industry on India has been truly dramatic. From the seeds of BPO firms has emerged a new middle class with an almost insatiable buying power. In the early 1990s, there was a single government run news broadcaster. Now, the cable media and news outlets have been completely revolutionized with news organizations like CNN and the Associated Press setting up autonomous units in India. Taking the automobile industry as an example – prior to the economic reforms of 1991, the sole manufacturers of cars and two wheelers in India were indigenous brands – Hindustan Motors being the largest with a few other smaller manufacturers such as Tata motors. When the markets opened up, there was a sudden 
flood of foreign manufacturers who desired to capitalize on the vast Indian middle class.
American manufacturers, Ford and GM, along with the Japanese Honda, were some of the earliest automakers to set up factories in India. This introduced competition into the market and brought about a marked decrease in prices. Now, companies like Mercedes-Benz and BMW have begun to cater to the growing luxury segment and have sufficient demand to make it commercially viable to set up manufacturing units within the country. Traditionalists continue to argue however that this consumer culture is destroying the moral fabric of Indian society by becoming more “westernized”.
Despite the booming middle class, India suffers from a wide disparity between 
the rich and the poor. Much of the success has not percolated down to the average citizens. The effects of outsourcing have remained limited to the cities with continuing problems of abject poverty and illiteracy in rural areas. Corruption is rampant at every level of government and the red tape is endless. Health care is poor and there is a dire need for new initiatives to improve sanitation. As the population grows, the problems will only multiply which is compounded by the incompetence of the government. The future remains hopeful, however, with individual entrepreneurs and leaders operating against these conditions to revolutionize the country from the inside out. R&D operations are slowly making their way to India, which is discussed here.