The Norwegian Network on ICT and Development: Annual workshop 2006 at the Norwegian University of Science and Technology (NTNU), Trondheim
November 23rd – 24th 2006
Venue: Norwegian University of Science and Technology, Trondheim, Norway
ICT as enabler of Global Production and Outsourcing: Implications for developing countries
Over the last 20-30 years, production of goods and services has to an increasing degree become globalised. Advances in information and communication technologies (ICT) have made possible the “splintering off” and outsourcing of many of the services from their providers.
India’s emergence as a globally competitive supplier of software and services is well known world wide. The ICT sector has served as a fertile ground for the growth of new entrepreneurial activity with innovative corporate practices in the country. It is also claimed that global outsourcing to India has led to reversing of brain drain, raising India’s brand equity and attracting foreign direct investment which in turn has other associated benefits.
Additionally, production of hardware has been moved to countries were the operational costs are low. After China entered WTO, the country has emerged as a lucrative base for manufacturing hardware.
But are outsourcing of production and services solely positive for the countries involved, or are there any negative effects? One thing is the assumption that outsourcing leads to loss of jobs in the “West”. Of greater importance are the critical voices from South who claim that outsourcing represents manipulation and exploitation of their people and natural resources. In order to maximise their profit, big multinational corporations bypass local government’s and people’s rights to such an extent that some have called it a new form of colonization.
Big populous countries like India, China, Indonesia, Pakistan and Bangladesh are not only interesting as producers of goods and services. They are increasingly being recognized as enormous markets, which may be another reason to locate production or other activities to these countries. One example is Telenor, which has 2 million customers in Pakistan and is the major owner of GrameenPhone, the biggest mobile operator in Bangladesh.
What about Africa? Despite the globalisation of production and outsourcing to low-cost countries, the ICT sector in Africa is still tiny compared to those in Asia, Latin America and Eastern Europe. It is claimed that Africa today is a far better place to do business than five years ago. The spread of mobile telephony has revolutionized ordinary life in a continent with the world’s lowest penetration of fixed-line telephones. Satellite links have vastly improved Internet access, and the new undersea cable (SAT-3) promises to improve and reduce the cost of all types of communications. But although Africa’s economic appeal is increasing, India and China are improving at a much faster rate which leads to the widening of the gap. Africans can start winning only if they move faster.
When will Africa be able to overcome the obstacles hindering its people to take part in the global production system, which in turn might lead to creation of jobs, economic growth and poverty reduction? What can be learned from the Indian experience when it comes to governance, regulations, role of private sector, infrastructure and development of human capital? - All decisive factors when dealing with participation in the global economy.
The workshop will address these questions and especially take a closer look at the role played by Norwegian companies in this context. According to IKT-Norge, the industrial body for the ICT sector in Norway, outsourcing of advanced software production from Norway to low-cost countries is not desirable - only manual routine tasks. Others claim that ICT as strategically tools are not given high priority among Norwegian companies and, thus, the potential to improve their competitive power through outsourcing is ignored.
Still, Norwegian companies are represented in developing countries, and a crucial question will be what strategies are used in order to adapt to local conditions. In what way do they utilise ICT to organise their global production? What has been decisive when deciding which country to establish in: Cheap labour, closeness to the market, or others? Does outsourcing imply a loss of control for the companies and thus a transfer of power?
The workshop will invite academics and representatives from the business community from the North as well as the South to discuss these issues towards the end of November 2006.