In the global economy of the early twenty-first century the division of labour between Asia's giants is clear. China, with its manufacturing prowess has earned the title of "Factory of the world". Whereas, India is likely to retain its tag as the "Back office of the world" for the time being, but the country is expected to face competition from its neighbour, China and other developing countries, in the long run. India has high hopes for its burgeoning trade in business-support services and many other professional services. Global off shoring has a market volume of roughly $70 billion, with India's share in the global market totaling 45 per cent. No doubt, skill and labour intensive services sector is India's strength and will remain its strength. But as a matter of fact, Indian service firms are under enormous pressure to reinvent their labour arbitrage-driven outsourcing model which has come under severe strain from a variety of forces - growing commoditization of services, rising protectionism, pricing pressure, competition from newer locations and also new technologies. Indian service firms have to move up the value chain by re-positioning and re-branding of its high quality services. This enables the sector to scale up faster, to beat the rising competition, using the vast and dynamic domestic market and the availability of low-cost, highly skilled workers, as a stepping stone.
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