Information Technology Enabled Services (ITES) Sector Industries Might be Cut Down to Size, but Globalization Will Continue

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  • Feb 2, 2009
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1 2008 International Institute for Sustainable Development (IISD) Published by the International Institute for Information Technology Enabled Services Sustainable Development The International Institute for Sustainable (ITES) Sector Industries Might be Cut Down Development contributes to sustainable development by advancing policy recommendations on international trade and investment, economic to Size, but Globalization Will Continue policy, climate change, measurement and assessment, and natural resources management. Through the Internet, we report on international negotiations and share knowledge gained through An IISD Commentary collaborative projects with global partners, resulting in more rigorous research, capacity building in developing countries and better dialogue between North and South. IISDs vision is better living for allsustainably; its mission is to champion innovation, enabling societies to live sustainably. IISD is registered as a charitable organization in Canada and has 501(c)(3) status in the United States. IISD receives core operating support from the Government of Canada, provided through the Canadian International Development Agency (CIDA), the International Oshani Perera Development Research Centre (IDRC) and Environment Canada; and from the Province of Manitoba. The institute receives project funding from numerous governments inside and outside Canada, United Nations agencies, foundations and the priate sector. January 2009 International Institute for Sustainable Development 161 Portage Avenue East, 6th Floor Winnipeg, Manitoba Canada R3B 0Y4 Tel: +1 (204) 9587700 Fax: +1 (204) 9587710 E-mail: [email protected] Web site: http://www.iisd.org/ Click here to enter text.

2 Allegations of corruption and fraud against leaders in the information technology enabled services sector (ITES) are ironic given that this sector provides global systems and solutions for transparent and accountable financial control. One can only wonder if the CEO and financial controller of India-based Satyam Computer Services Ltd. were using their own solutions for financial reporting when they defrauded the outsourcing giants shareholders and stakeholders. There is allegedly a billion dollars missing and, according to commentators, a lot more overstating and understating is expected to be unearthed. Yet, the best-in-class checks and balances that were needed to prevent such large-scale scams were omnipresent. Satyams board included the former cabinet secretary, the inventor of the Intel Pentium chip, a dean at the India School of Business and a professor at Harvard. The audit committee included independent directors, and financial disclosures had been filed with regulators and stock exchanges in India and U.S. We must see this as a wake-up call to the fact that global societies need better mechanisms for raising capital and a brand new take on what signifies value and relevance for shareholders and stakeholders alike. In addition, regulators and policy-makers need to get out of their ivory towers and take more responsibility for governance and market failure. While some have dubbed this scandal Indias Madoff, this embezzlement has little to do with rich private investors that were ready to take large gambles in transactions that happened in the dark. Rather, it involved institutional investors, socially responsible investment funds, trusting individuals and, moreover, 53,000 employees. As public disenchantment with the corporate world looks set to continue and companies find it difficult to demonstrate ethics and relevance, there is certainly the need to address the challenges. Against the backdrop of global market upheaval, IISD and AccountAbility will soon publish a report on responsible competitiveness in information technology enabled services, which we hope will raise the profile of business process outsourcing and software services as catalysts for more sustainable and equitable globalization. Our primer looks at how this could be donehow the world can be made more sustainable and flat though improved opportunities for knowledge and growth. Certainly the ITES sector still has much to boast about. It has invested unprecedented amounts of capital into improving e-connectivity, building skills, providing high-end employment and inciting entrepreneurship in the host economies that have been lucky enough to attract investment. It gave lower income economies a real hope of diversifying from low-end agriculture Information Technology Enabled Services (ITES) Sector Industries Might be Cut Down to Size, but 1 Globalization Will Continue

3 and manufacturing into more valued-added and higher-end industries. In the past decade, ITES upgraded itself from supporting routine and repetitive tasks to providing the intelligence for resource-efficient, productive and globally coordinated value chains in every industryfrom financial, medical and legal services to low-carbon logistics, transport and energy. The days of outsourcing are far from over. ITES industries might be cut down to size, but globalization will continue to provide the architecture for dealing with challenges still to come. Sustainable development cannot be envisaged without ITES, and the sector is just waking up to this imminent opportunity. Oshani Perera is an IISD Program Officer and co-author of a primer on services outsourcing by IISD and AccountAbility, scheduled for release in 2009. Information Technology Enabled Services (ITES) Sector Industries Might be Cut Down to Size, but 2 Globalization Will Continue

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