(ii) Mr. Ravi, an IT entrepreneur from Bengaluru, observed that several MNCs prefer India as their outsourcing hub for services like software development, customer support, data management etc. His friend Priya believes this is due to certain inherent advantages of the Indian economy. In your opinion, state and explain any two factors that make India a preferred outsourcing destination.

Question

Read the following statements – Assertion (A) and Reason (R). Choose the correct option given below:
Assertion (A): Full employment situation refers to the absence of involuntary unemployment.
Reason (R): Under full employment situation, all the willing and able-bodied people get employment at the prevailing wage rate.

Answer 1

Step 1: Factor 1 — Skilled English-Speaking Manpower.
India possesses a vast reservoir of educated, English-speaking professionals. Because the medium of instruction in higher education (especially engineering and management) is English, Indian workers can communicate effortlessly with clients in the US and Europe, making them ideal for global service delivery.
Step 2: Factor 2 — Cost Effectiveness and Wage Differentials.
The cost of labor in India is significantly lower than in developed nations. An MNC can hire a high-quality software developer in India for a fraction of the salary they would pay in their home country. This "wage arbitrage" allows global companies to reduce their operational costs while maintaining high service standards.

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