A study by Oxford Intelligence provides us with information about which sectors at this moment are the most active in outward FDI.
Software is the leading sector in outward FDI projects, with 30 % of all FDI between 2002 and 2006.
This sector is followed by the Business Services Sector, and the Pharmaceuticals Sector. Another key emerging sector in the time frame of 2002 – 2006 is the Financial Intermediation Sector. (Future Directions International,
The leading Indian FDI Investors during the period 2002-2006 in these four main sectors are:
In the sector - Software Tata Group 48 projects, Satyam Computer Service 23 projects, Aptech Ltd 8 projects and Infosys Technologies with 8 projects.
In the sector - Business Services, Tata Group 16 projects, HCL Technologies Ltd 5 projects, Ma Foi Management Consultants 5 projects and Videsh Sanchar Nigam Ltd 4 projects.
In the sector - Pharmaceuticals, Ranbaxy Laboratories 17 projects, Dabur India Ltd 6 projects, Glenmark Pharmaceutical 3 projects and Cadila Healthcare Ltd 2 projects.
In the sector - Financial Intermediation, ICICI Bank Ltd 23 projects, State Bank of India (SBI) 19 projects, Bank of Baroda 14 projects and Bank of India 10 projects.
The main reasons for Indian companies to engage in outward FDI are:
- Market related factors, more and more companies are looking for a niche market for their product, and especially the IT-sector finds a growing market abroad.
- More companies realize that they operate in a global economy and not in a domestic one. Therefore specialization from abroad are used to improve the way of doing business of the company.
- Supportive host-governments. Most host-governments are very supportive towards incoming FDI because it adds to their economy.
- There is a growing concern about running short of key resources and inputs for the company’s economic expansion
One success story from the sector – software, is about the company Infosys Technologies
Infosys Technologies was created in 1981 in Bangalore. With over 52,000 employees worldwide it now provides consulting and IT services to clients globally.
The company has pursues an international strategy to strengthen its competitive position and become a global player. Infosys has over 30 foreign affiliates worldwide, covering all countries and territories where its major customers are located.
Infosys Technologies’ global initiatives began with the opening of - Its first subsidiary in the Unites States in 1987.
- Its first European subsidiary was created in the United Kingdom in 1996,
- Affiliates in Belgium, Germany and Sweden 1997
- In 2005, Infosys set up its first overseas operations centre in the Czech Republic and bought RASInfo in France.
Cecilia Helland