Research On The Economic Environment Of Undertaking Service Outsourcing Country

In recent years, with the development of information and communication technology, the service globalization has been growing in an accelerating trend and become an important part of economic integration. In this movement, countries in the world participate in the international division of labor via service outsourcing industry. Do what you do best, outsource the rest! Essentially, service outsourcing industry uses the division of labor to reorganize the existing mode of production.In the past thirty years, with the advantage of labor cost and market size, China has undertaken a large number of manufacturing industries and known as the "World Factory". However, with labor cost rising, growing shortage of natural resources, as well as the progressive deterioration of ecological environment, it is necessary for China to transform the mode of economic growth and enhance its position in the global production chain. With the development of service outsourcing industry, it would be an important way for China to promote the internationalization of services. Meanwhile, India's service industry has been developing rapidly in recent years. With the opportunity of resolving Millennium Bug and the advantages of language and human resources, India has become the most important destination of service outsourcing industry. And India has become the "World Office" with the development of service outsourcing industry. In the process of undertaking service outsourcing, a better economic environment would surely promote the development of service outsourcing industry. With the examination of the economic environment of the service outsourcing undertaking countries via scientific methods, we would explain why could India become the most important destination of service outsourcing industry and reveal China's current economic environment to undertake service outsourcing.The basic analytical framework for this thesis is as follows:After reviewing the relevant theory and literature review, firstly we theoretically analyzed the undertaking service outsourcing countries'economic environment. We obtained eight factors for countries to impact undertaking service outsourcing from macro, sectoral and micro levels. After that we used the method of econometrics to make the significance test between relevant factors and scales of China and India's undertaking service outsourcing, and removed variables which have no significant correlation. And then, we extracted principal components by Principal Component Analysis and measure the economic environments of China and India undertaking service outsourcing over the past decade. Finally, we gave specific policy recommendations according to the theoretical and empirical analysis.The principal innovation of this thesis is as follows:firstly, by referring Indian data, we found suitable alternative to the variable of the scale of China's undertaking service outsourcing. Secondly, we used Principal Component Analysis in Statistics to measure the economic environments of China and India undertaking service outsourcing. The result showed that the economic environment of the two countries had promoted the service outsourcing industry. But the improvement pace of the economic environment has lagged the development of service outsourcing industry in China since 2003.The economic environment has been synchronized in the development of service outsourcing industry in India from 1998 to 2007.