The Economy in the Long Run
India is one of the most popular offshore countries for a lot of businesses that are looking for strategic facilities to expand their operations or wanting to improve their services. One such company is Apple, the maker of iPhone products, which recently open its first offshore technology development facility in Hyderabad, India in June of 2016. The technology center located in the silicon valley of India is built to develop and improve the company's version of Apple Maps and promises to dominate the navigation space currently being held by Google Maps.
Factors that Determine India's Productivity
There are various determinants of productivity such as Physical Capital per Worker, Human Capital per Worker, Natural Resources per Worker, and Technological Knowledge (Mankiw, 2015, p242-243). They are essential factors for Apple to consider because productivity can guarantee sound output or return to its investment at a low-cost element allowing a higher profit when developing the Apple Map. Physical Capital per worker or capital is the cost of infrastructure and equipment for production in India. The Human Capital per Worker relates to the knowledge and education of the workers available to produce the product. Natural Resources per Worker deal with the availability of the natural resources in production. Technological knowledge is the ability of the workers to produce the product in the best way possible.
India is the right choice for Apple to meet its developmental needs and expand its operations because of the country's productivity and growing standard of living. The country can offer highly educated and skilled manpower, technical expertise at a low-cost factor. Also, India has an expanding economy and has the offshore advantageous position due to its active government support and stable political climate (Offshore outsourcing to India, 2016).
The biggest advantage of offshoring to India is cost savings. Companies...