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Outsourcing Bangalore
I mean outsourcing from Bangalore, not outsourcing to Bangalore. Apparently production costs are rising out of control in a city that accounts for a third of India's software exports. The major culprit is congestion; a seven-kilometer commute can now take ninety minutes. Population has grown by a third since 1995, and the new metro and airport are badly behind schedule. Bombay has had similar problems.
The remedy? Madras (Chennai) is rising in popularity as is Calcutta, despite its propensity to elect communist governments.
The bottom line: Indian infrastructure is chaos. This economy has only a limited ability to absord outsourcing ventures. For instance it is common for current enterprises to supply their own electricity and other public services.
I have drawn on conversations and the November 1 Business Week.
Posted by Tyler Cowen on November 4, 2004 at 07:10 AM in Economics | Permalink
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