India FDI performs impressively in IBM Global Business Services report

India fell one place to Philippines for business support functions (such as shared services and business process outsourcing) in the global ranking, after having challenged the top position for several years, revealed an IBM report. This is the first time that India is not in the leading position for these activities.

According to the report, the Philippines beat India because it offers a similarly attractive business environment for international business support functions as India, but has not had the same labor cost increases as have occurred in various Indian ‘hot spots’ in recent years. However, India emerged as the top ranking destination globally by estimated jobs in business support services – 2009 (08), revealed the report.

The IBM report further revealed that while most sectors have seen considerable declines in foreign investment in recent years, the renewable energy cluster has stood out by its continued growth in investment activity. The cluster as a whole created more than 35,000 jobs globally from foreign investment in 2009, compared to approximately 30,000 jobs in 2008. Within the cluster, solar and wind energy have experienced particular significant growth, each accounting for about 40% of the jobs created in 2009.

In contrast, bio-fuels – which perhaps have more-adverse environmental consequences – have seen a dramatic decline in investment activity from a peak of more than 21,000 jobs created in 2007, to just over 8,000 jobs in 2009. Investment in the cluster has so far been heavily focused on production activities in key markets, with the United States, India, Brazil, and China the top recipients. Other countries that have received significant investment are those that have strived to create a domestic market for renewable energy, such as Malaysia, Spain, and Germany.

Companies from emerging countries in general, and India and China in particular, are becoming prominent overseas investors, with substantial job creation overseas as a result. With the continued rise in prominence of these countries on the global economic stage, their role as sources of investment is expected to further increase. China and India are emerging as important sources of global investment.

30 Dec 2010.