Academy of International Business_us Mid-west Chapter

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Outsourcing to India:Current and Future Trends

Abdullah AldarrabSandeep Jagani Tauseef Iqbal

Date: November, 10, 2006

The University of Toledo



College of Business Administration

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Index

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Abstract……………………………………………………………………...

The Economy of India ………………………………………………………

Challenges to the Indian Economy…………………………………………..

Outsourcing…………………………………………………………………..

Outsourcing to India………………………………………………………….

IT Outsourcing ………………………………………………………………

Service Outsourcing………………………………………………………….

Competition to IT Outsourcing to India……………………………………...

Framework for Evaluating the Competition………………………………….

Competitive Matrix…………………………………………………………..

Competitive Profile Matrix…………………………………………………..

India Facing the Challenges………………………………………………….

Conclusion……………………………………………………………………

References……………………………………………………………………

Appendix……………………………………………………………………...

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Outsourcing to India:Current and Future Trends

Abstract:

This paper will give an overview of the outsourcing activities conducted in the Indianmarket. Multinational Corporations (MNC’s) have managed to identify several countriesworld wide to outsource their non core competencies abroad, in order to focus more onwhat they can do better than others and improve profitability. India is one of the leadingcountries to attract foreign business activities in the past two decades. This was a result of multiple factors that made the country an attractive choice for outsourcing by MNCs.With a series of reforms by the Government of India to reduce trade barriers combinedwith a high quality workforce, the service sector became more appealing to foreignservice companies looking for economies in cost and time. This paper will discuss thecurrent advantages and trends for outsourcing IT to India, and shed light on the future of this trend. In addition, it will discuss the threat to India by other Asian developingcountries as China, Malaysia, Philippines, Russia and South Africa in the field of IT,which may take away the so called monopoly enjoyed by India.

The economy of India:

India has an assorted economic portfolio ranging from agricultural products, handicrafts,and vast portfolio of modern industries to the most important and dominant sector, theservices sector. Most of the economic growth of India is attributed to the service sector,accounting for half of its output (53.8% in year 2005). The service sector in Indiaaccommodates less than one quarter of its labor force (496.4 million in 2005). (CIA.org).The Indian economy is the second most populous in the world, and is the eleventh largestin terms of current Gross National Income (GNI). (IBEF.org, India Watch). In terms of Purchasing Power Parity (PPP), during the year 2000, India was ranked fourth. India’sGDP growth for India for the years 2003-04, 2004-05 and 2005-06 was 8.5%, 7.5% and8.4% respectively. (IBEF.org, India Watch). The per capita income for India in 2005grew by 6.9%.

The gulf war was a turning point in Indian economy, where the Indian governmentrealized that changes were a must and not a privilege to be chosen. A relatively closedeconomy does not act as a shield from foreign exchange crises. Policy actions were proposed as a part of general macroeconomic reforms serving to achieve a stabilizedeconomy. External sector policies were structured to gradually open the Indian economy

and consequently the Indian market. In fact, a significant number of businessopportunities for foreign investment have opened dramatically since the government hadopened the Indian market in the 1990s. (Sen & Srivastava, 2004)

In recent years, the Indian economy has grown drastically with positive impact on bothsocial and economical fronts. On the social front, “India today has 108 million childrenaged 6 to 10 attending primary school, making it the world's second largest educationsystem after China.” (Chopra, 2004). Services exports grew by 71 per cent in 2004-05,

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and 75 per cent in April-September, 2005. In 2004-05, software service exports grew by34.4 per cent and by 32 per cent in the first half of 2005-06. Trade in services has beengrowing faster than merchandise trade – for example, in 2004-05, growth in servicestrade was 78.6 per cent, compared to 33.6 per cent in merchandise trade. The share of services in total trade increased from 23.5 per cent in 2003-04 to 29.1 per cent in 2004-05

and further to 34.4 per cent in the first half of 2005-06. (Data from IBEF.org, ExternalSector)

Challenges to the Indian Economy:

While India is showing its outstanding competitive advantages toward marching in to theworld of super economic powers, the country has to address multiple issues in order tosustain its competitive advantage in the business world. These challenges need to beovercome, both on the domestic as well as on the external front. One of the seriouschallenges faced by the Indian economy on the global stage is to deal with the risingcompetition from China, due to its speedy emergence and agreement to the World TradeOrganization (WTO) rules. This has crucial implications for the Indian economy since

China’s WTO accession package has major liberalization kit that has important implicationsfor India to sustain its competitive advantage in the global economy. (Sen & Srivastava,2004)

Outsourcing:

Outsourcing goes back in time to the Romans. It has been said that the Romans used tooutsource their tax collections to others. England in the eighteenth century has used manyforms that are very close in meaning and function as to outsourcing (Duffy, 2001).Outsourcing non-core business processes and competencies to a third party gives theorganization better focus and control on their core competences, which will lead to increasethe overall profitability of their business. Outsourcing gained greater attention in the 1970s,“when large corporations were considered to be underperforming, a trend that became evenmore pronounced in the early 1980s with the onset of global recession” (Kakabadse &Kakabadse, 2000). Furthermore, the 1980s seen a shift and change of direction in businessstrategies focusing on cutting down the number of activities (Peters & Waterman, 1982). As aresult, vertically integrated and self-sufficient corporations were achieved by managers whoreevaluated the core functions of the organization (Mullin, 1996). In order to increase profitability per business process, corporate houses tried ‘Business Process Reengineering’(BPR) in and around 1994–96 for bringing in operational excellence to re-engineer their business processes for optimal service, quality and cost.

According to Craig (2004), outsourcing is a feasible choice for many companies. Outsourcingnon core activities from the supply chain to a place where that activity can start adding valueto the organization. Businesses outsource for many reasons such as increasing shareholder value, gaining competitive advantage, reducing costs, improving operations, businesstransformation, overcoming lack of internal capabilities, keeping up with competitors,mitigating capital investment, improving capabilities, improving service, increasing sales, andreducing inventory. In addition to this, other reasons for outsourcing can be; increasinginventory velocity and turns, improving cash flow, turning fixed costs into variable costs andmuch more benefits. (Craig, 2004)

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Outsourcing can solve production problems that are faced by global companies. Thesecompanies can reach out to cheaper labor markets for production; they can outsource material purchasing to companies that can provide them with the best materials with better prices.Outsourcing can even help in reducing time to market and overcoming timing issues whichare of primary importance in outsourcing call centers from the U.S. to India.

However there are some problems in outsourcing. According to Linda Taylor (2006) inher article in Industry Week, many manufacturers and business these days arereevaluating their strategies for outsourcing. The cost of fuel has increased dramaticallymaking transportation cost go sky high. In addition, time to market is facing extreme pressure in order to reduce such unpleasant delays to the market; therefore, the closer oneis to the market, the better one can reduce the delays. Supply chain managers are in greatconcern on multiple issues such as time of delivery and cost in general. The responsetime from ordering to fulfillment as well as cost of transportation to the market is theissue to address when deciding for outsourcing. (Taylor, 2006)

Outsourcing to India:According to (Bhowmik, 2004), outsourcing in India started with the software industries morethan a ten years ago. The starting city was Bangalore. With the revolution of the Micro-Electronics in the 80s, production in India has seen an increasing level of changes. In fact,Bangalore is considered the ‘Silicon Valley’ of India, as a result for accommodating largenumber of software companies. (Heitzman, 2004). Furthermore, a swift improvement incommunications in general led to hasty transfers of capital and production between nations. InKolkata, the government has realized the importance of building up and creating an entirelynew area for software corporations in its suburb, called, Salt Lake. They where hoping at thattime to enlarge this sector in the future (Mitter and Sen, 2000).

Bhowmik (2004) cites that Indian software producers are in a comparative cost advantagein regards to software production. In general, the cost of living is lower in India whencompared to developed countries. As an example, about $500 a month would beconsidered as a very decent salary for a professional software programmer. Furthermore,call centers have flourished in India due to the high proficiency in English as well as thelower wages operators look for when compared to their peers in the USA or UK. Theoperators are paid around $200 per month and supervisors earn around $400 to $500 amonth which are several times lower than what a person doing the same job would get inthe USA or in Europe. (Bhowmik, 2004). Business Process Outsourcing (BPO) to India isincreasingly becoming the strategic choice for companies looking primarily to achieve costreductions and improving their service quality. Such approach will allow these companies tofocus more on their core business capabilities and competencies.

The Federal Reserve Bank of Dallas in its issue 6, ‘Beyond the Border’ published in 2003cites that, to make outsourcing viable, other business-promoting factors must beconsidered as well, such as the number and quality of skilled workers, maturity of theoutsource market, government support, the legal system, political stability, location andaccessibility, education, infrastructure, time differentials, technological modernity andEnglish language skills. (Thomas, 2003)

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IT Outsourcing:

Significant growth of software exports can be accounted for with initial body shoppingand later by the ITES sector. Export of the ITES sector grew by 73 percent during 2001– 2 and 78 per cent in 2002–3. India’s BPO industry grew by 59 percent in 2002–3 and is projected to grow 54 percent in 2003–4 to $3.6 billion (Sharma 2005). Table 1 in

Appendix summarizes some important figures in support of the study. In the year 2000,the Information Technology industry reached an important milestone. For the first time,more than half (54%) of IT services purchased in North America were outsourced. In2004, China graduated about 500,000 engineers, India, 200,000 and the United States,70,000, according to a report called "Rising above the Gathering Storm" issued last fall by an advisory panel of the National Academies (foxnews.com). In addition to this,Federal Reserve Bank of Dallas cites in its Issue 6 (2003), ‘Beyond the Border’, that,even though India’s basic infrastructure is among the worst in the world, businesses inIndia have found ways to compete globally in the IT arena, making India one of theworld’s leaders in software exports. India has many universities dedicated to maintainingstate-of-the-art IT curriculums, and more than 70,000 software engineers graduate

annually from Indian institutes. (Thomas, 2003)

Services Outsourcing:

An article in EconomyWatch.com (2005) analysis that, “service sector accounts for more thana half of India's Gross Domestic Product (GDP). The rise in service sector's share in GDPmarks a structural change. Reason for high growth rate in service sector in India isliberalization in regulatory framework. That gives rise to innovation and high export earnings.The growth rate of India's service exports in 2002 was 8% compared to 5% Worldwide. Indiais ranked 21st among exporters of services. India is a signatory to the General Agreement onTrade in Services (WTO-1995) and is actively engaged in seeking full opportunities for freemovement of services across borders. Keeping in view the growing dimensions with structuralshifts the Government of India has given special status to the services sector in its Export-Import Policy 2002-2007 announced on 31st March 2002. It included all the 161 tradableservices covered under the head "Services" where payment for them is received in free foreignexchange.” (EconomyWatch.com, 2005)

India’s service sector is considered one big magnate to attract foreign corporations to thecountry. The telecommunication infrastructure in some parts of the country as well as thehighly quality level of talented Indians who can speak multilingual languages and especiallyEnglish made it an ideal choice for many companies who are willing to outsource their noncore competencies to foreign firms. India is a call center to many foreign companies such asDell computers, American Express and many other companies. In addition, outsourcing whatis called Business Process Outsourcing is now a challenging objective for India.

Competition to IT Outsourcing to India:

India is one of the hottest locations for offshore outsourcing with software exports to thetune of $6.2 billion in 2000-01 and a CAGR of 62.3% for the last five years. During2000, 185 of the Fortune 500 companies outsourced their software requirements to India.According to a McKinsey-Nasscom study, the potential for software services exportsfrom India will be USD 50 billion by 2008. The following are the charts constructed

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using the data of Nasscom what shows India’s position with respect to the other countriesand how far are other countries in the race with India to become world leader in the fieldof Information Technology.

Figure 1: Competitive Assessment of Emerging Nations – 1

Source: Mckinsey-NASSCOM

According to Mohapatra(2003), emergence of China, Philippines, Russia, Brazil, andSouth Africa among others as developing market alternative to India’s IT intelligence hasthreatened India’s supremacy in this field. China as an example has managed to maintainits leading position over India in the manufacturing sector for many years. CurrentlyChina is creating a potential threat to India’s power in the IT services sector. A McKinseystudy examined China’s advantages and concluded that China has all the resources andcapabilities to develop its IT sector and services hastily. “China not only has the scientific

workforce but also has been very aggressive in pursuing training programs specificallytargeting their English deficiency. The Chinese premier has also been seeking India’shelp in technology transfer and business cooperation in this regard. Some researchersargue that the benefit for Indian firms to tap into the huge Chinese market can only comeat the cost of developing the intellectual asset of China by Indian companies.”(Mohapatra2003). International Association of Teachers of English as a ForeignLanguage mentions on their website that the learning of English in China now occupiesthe attention of millions of its people. It is believed that currently three hundred million people are actively engaged in the job of learning English. (IATEFL.org). This newEnglish speaking population may give china a competitive edge over India.

In recent years, the Philippines have become the offshore destination of choice for callcenter outsourcing, specializing in customer support services. A recent article onEzineArticles.com motions that, because of the Philippines’ dominancy in English andstrong customer orientation, many leading multinationals has used the Philippines as ahub for customer service. “America OnLine, the largest U.S. Internet service provider,maintains a staff of 600 at its call center in Clark, Pampanga. Caltex, Procter & Gamble,Barnes and Noble, among others, have built large-scale service centers in the Philippines.With a literacy rate of 94%, the Philippines have a large pool of information technology

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professionals and a cost-competitive telecoms infrastructure. The country ranks third inKnowledge and Information-based jobs in the 2002 Global Technology Index researchdone by the META Group. Three million college graduates join the workforce each year, providing a tremendous source of talent.” (Pepito, 2005)

Figure 2: Country Competitiveness Assessment – 2

Source: McKinsey/NASSCOM, 2003

A report from market research firm Gartner, Inc. states that in addition to China,Philippines and Russia a number of emerging countries such as Malaysia, Vietnam andEastern European countries like Hungary and Poland, are also starting to create a threat toIndia's control in business process outsourcing (BPO). Unless India formulates a long-term strategy to improve its infrastructure and consistently work on growing its skilledlabor force, India will face the movement of its foreign clients’ BPO to other countries.(Bhatnagar, 2005)

Framework for evaluating the competition;

To give a quantitative evaluation to the competition, Competitive Matrix and CompetitiveProfile Matrix are used. Various factors are listed and values are given as weight or ratewhich is further explained in the respective sections of the paper. The values are obtainedform Global Outsourcing Guide – 2006 published by CIO magazine as well as bestassumptions made after the review of literature. The numbers reveal the relative strengthof firms, but their implied precision is an illusion. Numbers are not magic. The aim is notto arrive at a single number but rather to assimilate and evaluate information in ameaningful way that aids in decision making.

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Competitive Matrix:

The purpose of the Competitive matrix is to assess the position of the competition withregards to the focus or sponsored country; in this case it is India. More in-depth theevaluative criteria, better the analysis. Once a profile is obtained on the competition,definitive statements can be made about the market or industry. The tracking of the

competition on a continuous basis is a management mandate for good decision-making.

Five top countries that compete with each other in getting FDI in the field of Informationtechnology are listed. The competitive position of countries is evaluated by assigning avalue per the categories that best identify the characteristics of sponsored country and itsmarket. A value of 1 to 5 is noted per the observations or data acquired. A total iscalculated and the competing countries are ranked. Two matrices, one without thesponsored country and the other with the sponsored country included are developed.Each matrix is then compared to the other to determine the difference and where thesponsored firm is strong or weak. Areas of opportunity are then determined based uponthe observations.

Values per observation are obtained from the rankings and literature of GlobalOutsourcing Guide – 2006 published by CIO magazine.

Table 1: Competitive Matrix -1 (Without sponsor country India)Competitor Countries

CurrentFDI

CostEfficient

Programmers

Quality of Services

ManagementSkills

Location or geographical

safety

Product or Service

Diversity

EnglishProficiency

TOTAL

China 4 3 2 4 3 3 1 20

Malaysia 4 2 3 3 3 3 2 20

Philippines 4 3 3 3 1 3 4 21

Russia 4 2 2 3 3 3 1 18

South Africa 4 2 2 3 3 2 4 20

Grand Total 99

Table 2: Competitive Matrix -2 (Including sponsor country India)Competitor Countries

CurrentFDI

CostEfficient

Programmers

Quality of Services

ManagementSkills

Location or geographical

safety

Product or Service

Diversity

EnglishProficiency

TOTAL

India 5 3 4 4 3 4 4 27

China 4 3 2 4 3 3 1 20

Malaysia 4 2 3 3 3 3 2 20

Philippines 4 3 3 3 1 3 4 21

Russia 4 2 2 3 3 3 1 18

South Africa 4 2 2 3 3 2 4 20

Grand Total 126

From the data it is clear that when India is included in the Competitive Matrix -2, the

total score is increased by (126-99)/99 = 27.27% which means that India has a weight of over 27% in the field of outsourcing in Information technology among the whole world.But now the area of concern for India is, if the labor cost/programmer cost kept on rising,Foreign Direct Investment (FDI) to India will start declining. On the other hand, this FDIwill go to any of its competitor countries, which will lower the strength of India andincrease the strength of competitor in the above Competitive Matrix. Maximum score thatcan be achieved according to the Competitive Matrix is 35.

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There are opportunities for India to improve in many factors. For example, costefficiency of programmers can be improved if few practices are ‘insourced’ within thecountry but to a more cost efficient or developing company. In addition to the highEnglish Proficient employees, if the companies included employees who are proficient inother languages as Spanish, French or German, this could give them a cutting edge.

Competitive Profile Matrix:

The Competitive Profile Matrix (CPM) identifies a country’s major competitors and their particular strengths and weaknesses in relation to a sample countries’ strategic position.Assign to each factor a weight that ranges from 0.0 (not important) to 1.0 (veryimportant). The weight indicates the relative importance of that factor to being successfulin the firm's industry. However, the factors in a CPM include both internal and externalissues; therefore, the ratings refer to strengths and weaknesses, where 4 = major strength,3 = minor strength, 2 = minor weakness, and 1 = major weakness. In a CPM, the ratingsand total weighted scores for focus country; India, in this case, can be compared to thesample countries. This comparative analysis provides important internal strategic

information.

Table 3: A Competitive Profile Matrix

IndiaChina Malaysia Philippines South Africa

CRITICAL

SUCCESS

FACTORS

WEIGHT RATING SCORE RATING SCORE RATING SCORE RATING SCORE RATING SCORE

Current FDI 0.10 4 0.40 4 0.40 4 0.40 4 0.40 4 0.40

Cost Efficient

Programmers0.20 3 0.60 3 0.60 2 0.40 3 0.60 2 0.40

Quality of Services 0.20 4 0.80 2 0.40 3 0.60 3 0.60 3 0.60

Management

Skills0.10 4 0.40 4 0.40 3 0.30 3 0.30 3 0.30

Location or

geographical

safety

0.10 3 0.30 3 0.30 3 0.30 1 0.30 3 0.30

Product or

Service

Diversity

0.10 4 0.40 3 0.30 3 0.30 3 0.30 3 0.30

English

Proficiency0.20 4 0.80 1 0.10 2 0.20 4 0.80 4 0.80

TOTAL 1.00 3.70 2.50 2.50 3.30 3.10

Note:(1) The ratings values are as follows: 1 = major weakness, 2 = minor weakness, 3 = minor strength, 4 = major strength. (2) As indicated by the total weighted score of 2.5, China and Malaysia are weakest. (3) Only seven critical

success factors are included for simplicity; this is too few in actuality.

As used in forming of Competitive Matrix, values per observation in CPM are alsoobtained from the rankings and literature of Global Outsourcing Guide – 2006 published by CIO magazine. Factors namely, Cost Efficient programmers, Quality of Services, and

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English language Proficiency are assumed to be of high importance and hence they areweighed 0.20 while the others are weighed 0.10.

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The result mentions that still India is ahead in overall performance but it is now beingchased other competitor countries like Philippines and South Africa. If this not takenseriously, there is a threat that India might face some stronger challenges in futureresulting in loosing the ‘monopoly’ enjoyed in the past decade. To protect itself for this,

India might have to recognize and overcome the current challenges it faces.

India Facing the Challenges:

According to the NASSCOM-McKinsey Report 2005, despite the outstanding growth inIndia's offshore Information Technology Business Process Outsourcing industries, thissector will still face challenges. These challenges should be addressed and properlymanaged to overcome its complications in order to keep India in a leading position as it isnow in the global market for IT-BPO. Offshoring companies are engaged in re-engineering their operating systems and processes to keep up with the offshore businessmodel. Therefore, changing business processes to accommodate large offshoreworkforces is the goal to achieve to keep the country in its leading position, though it is

considered as a difficult and a time-consuming job.

The NASSCOM-McKinsey Study (2005) identifies many challenges that are currentlyfaced by India. First, India’s offshoring IT-BPO industry will face predictable shortage inthe next few decades. Moreover, currently about 25 percent of technical graduates and10-15 percent of general college graduates are considered as suitable to work in the IT-BPO industry. Furthermore, India needs to work on increasing the number of skilled ITworkers who are fluent in different languages in order to create a new competitiveadvantage for themselves and ultimately for their country. The study goes on saying thatIndia has to improve its urban infrastructure, which has serious bottlenecks. In addition tothis, India's cities are already heavily populated, and future growth will have to comefrom entirely newly constructed cities outside of Tier 1 and Tier 2 cities. Moreover,Indian IT and BPO services providers have to be more innovative in their products andservices which they provide to their clients. Finally, the study suggests that the IT-BPO providers should find ways to reduce the total cost, since wages and other costs are rising by 10-15 percent per annum. This is to ensure savings will be constant for the servicesthey provide to their clients.

Conclusion:

India has a leading edge to attract many foreign companies for outsourcing their non coreactivates. The large number of IT graduates, the mastering of foreign languages, and theIT infrastructure it holds will still be the factor for judging outsourcing decisions to India.India has to focus more on reducing cost to be of great benefit to the outsourcingcompany. Competition will grow by time from other countries such as China where costwill be an influential factor. Therefore, reduction of inflation of labor cost should be newarea of research for Indian Outsourcing Industry. In terms of manufacturing, thegovernment should keep working in liberalizing its heavy industry by allowing morenumber of foreign investor’s to pour their FDI in the country. Such a step from thegovernment will create more jobs and opportunities to India. Further studies on theadvancement made by countries such as China, South Africa, Philippines, and Malaysia



should be conducted by Indian researchers in order to maintain India’s dominant positionin the field of outsourcing.

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APPENDIX

Figure 1

Source: http://offshoreitoutsourcing.com/Pages/outsourcing_statistics.asp

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http://offshoreitoutsourcing.com/Pages/outsourcing_statistics.asp





POVERTY AND SOCIAL India SouthAsia

Low - IncomeCountries

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POPULATION, mid year (millions) 2004 1,079.7 1,448 2338

Average Annual Growth, 1998-04

Population (%) 1.6% 1.7% 1.8%

Labour force 2.1% 2.1% 2.1%

Poverty (% of population below

national poverty line)

29 - -

Urban Population (% of totalpopulation)

29 28 30

Life expectancy at birth (years) 63 63 58

Infant mortality rate (per 1000 births) 65 66 79

Child Malnutrition (% of children under5)

47 48 44

Acess to an improved water source 84 84 75

Illiteracy 39 41 39

Gross primary enrollment (% of schoolage pop)

99 97 94

Male 107 105 101

Female 90 92 88

Some More Indicators On People

Population Growth 1.5 for the year 2003-04

Fertility Rate (births per woman) 2.9 for the year (2002-03)

Child immunization, measales (% of under 12 mos)

67 for the year (2002-03)

Technology And Infrastructure

Fixed lines and mobile telephones (per1000 people)

51.9 (for the year 2002-03)

Personal computers (per 1000 people) 7.2 (for the year 2002-03)

Internet users 16.6 million (for the year 2002-03)

Key Economic Long Term Trends

1984 1994 2003 2004

GDP (US $ billions) 206.5 322.6 600.7

(Average annual growth) 1984-94 1994-04 2003 2004

GDP 5.4 5.8 8.6 6.9

GDP per capita 3.3 4.1 7 5.4

Exports of goods and services 9 12.8 4.9 8

19



Structure of the Economy

(% Of GDP) 1984 1994 2003 2004

Agriculture 35.2 30.4 22.8 21.2

Industry 26.2 27.1 26.4 27

Manufacturing 16.4 16.9 15.6 16.1

Services 38.7 42.5 50.7 51.8

Average Annual Growth 1984-94 1994-04 2003 2004

Agriculture 3.4 2 9.6 1.1

Industry 6.3 5.6 7.0 7.7

Manufacturing 6.2 5.6 6.9 7.7

Services 6.7 8.2 8.9 8.9

Prices and Government Finance

1984 1994 2003 2004

Consumer prices 4.3 7.6 3.7 6.6

Government Finance

( % of GDP, includes current grants ) 1994 2003 2004

Overall surplus/ Deficit -7.5 -9.3 -10.6

20



Trade

( US $ millions ) 1984 1994 2003 2004

Total Exports (fob) 10,061 26,855 62,952 76,345

Total imports (cif) 15,715 35,904 79,658 99,836

Balance of Payments

(US $ millions) 1984 1994 2003 2004

Current Account Balance -2899 -3785 8160 2141

Financing items (net) 2516 9526 8820 19655

Changes In Net Reserves 383 -5741 -16980 -21795

Source – World Bank

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Academy of International Business_us Mid-west Chapter

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