International Trade in Services.pdf - DSpace at Khazar University

Exporting Information Technology Services: In the Footsteps of India 237
multinationals, the institute found that, while the number of college-educated
graduates in developing countries is growing quickly (over 5 percent annually),
only a small fraction of the potential job candidates can successfully work in a
multinational company. This shortcoming arises because of limited suitability
(for example, the quality of the training and language and cultural issues), lack of
accessibility (lack of mobility and dispersion of labor supply), and domestic competition
for talent. Suitability rates in engineering vary greatly by country. In
China and Russia, only 10 percent of the candidates would be suitable to work for
a multinational. The corresponding numbers are 13 percent in Brazil, 20 percent
in the Philippines, 25 percent in India, 35 percent in Malaysia, and 50 percent in
the Czech Republic, Hungary, and Poland.
The IT service sector is entirely dependent on well-trained, technically adept
personnel. Mastering the local language in the client country is a precondition in
client-related roles and an advantage in other roles. Consequently, countries or
regions that prohibit lecturing in foreign languages may, by extension, be removing
themselves from the potential locations for the crossborder supply of IT services.
The skill requirements in IT services, as in most other export-oriented services,
are generally higher than those in manufacturing. A bachelor’s of science degree
is often the entry requirement for a young individual who seeks a career in the
export-oriented IT service sector. Thus, investment in education is of paramount
importance. As a high-income industry, private or public-private colleagues can
increase access to technical training and, thereby, the supply of labor.
Policy makers in developing countries with capacity constraints in the
provision of higher education services can learn from the experiences of private
institutes in countries such as India and Pakistan in which the government’s
role increasingly involves providing effective regulation for quality assurance.
Governments can facilitate access to finance for training institutes and students,
work with the private sector to ensure the relevance of curricula, and help
enhance governance in the education sector. Monitoring results and ensuring
transparency are effective means to put positive pressure on training institutions.
Reduce barriers to labor circulation
The global delivery model that has been championed mainly by India’s exporters
of IT services and, increasingly, by their foreign competitors is based on a combination
of crossborder supply (Mode 1) and the temporary movement of natural
persons (Mode 4). Rapidly improving global information and communication
technology networks have brought down communication costs and spurred innovation
in technology, and virtual work environments have allowed a growing
number of IT professionals to stay in low-cost sites, such as India (offshore), and