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Expanding outsourcing requires comprehensive approach, panel says

29 May 2013

Developing-country governments wanting to join the boom in offshoring and outsourcing need a range of carefully designed policies, a series of experts told the Global Forum on Services.

Their remarks came during an afternoon panel session on "Building supply and export capacity: the case of outsourcing services".

The Global Services Forum (GSF) is being staged in Beijing by UNCTAD in cooperation with the Ministry of Commerce of the People's Republic of China and the Beijing Municipality.

The services sector has emerged as the largest segment of the global economy. It accounts for 66 per cent of gross domestic product (GDP) and 44 per cent of employment worldwide, and trade in services constitutes nearly 20 per cent of world trade in goods and services, with two thirds of global foreign direct investment (FDI) flowing into the sector.

Panelist Tiak Koon Loh, CEO of the China-based Pactera Technology International Ltd, told the meeting that "Government policies, as in China, have the utmost importance for the success of becoming an global outsourcing destination."

Within the service sector, outsourcing has become fundamental for companies worldwide, speakers said. Companies transfer "non-core" activities to other firms, which often are based overseas.

Panelists and the 200 participants who attended the session from both the public and private sectors discussed the trend in offshoring of services, underlining the payoffs in terms of job creation and broad economic benefits. They said the positive effects can be large. The development of services contributes significantly to economy-wide growth, as services are essential inputs to other products and services, speakers noted.

In particular it was stressed that services with important social functions - health, education, energy, transport, and telecommunications - remain indispensable for the achievement of the United Nations Millennium Development Goals and for meeting the post-2015 challenge of inclusive and sustainable development.

Challenges remain in putting in place careful strategies that encourage the right sort of investment, the development or transfer of technology, the spurring of innovation, and the fostering of outsourcing industries, speakers said.

Panelists stressed that policy and regulatory frameworks should be set up by governments to establish the foundations for offshoring operations.

The afternoon session featured two panel discussions, the first focusing on the topic of "outsourcing becoming a necessity more than a need" and the second on "building supply and export capacity."

Both sessions promoted the sharing of experiences and lessons learned to identify successful and innovative strategies and "best-fit" policies to maximize the positive contributions the sector can make to inclusive and sustainable development.