Wednesday, August 8, 2007

3Cs for Investment

One of my friend had a question about my article on Nepal as an off-sourcing destination. He says Climate, Consumer spending behavior and Cheap hotels can not be factors for investment decisions. While I find otherwise and I prefer to add these 3Cs to the investment attributes.

First, the companies doing knowledge based work like offshore consulting, IT services etc. need to keep employees happy to retain. And yes, climate plays a vital role in people remaining happy. When people are pained by a cause in some actions, it generally inflates to other actions too. And those other actions may be just the reflection of the first. I have heard climate is one of the reason why people don't want to work in Chennai. And, California and Bangalore are the two places where climate gave edge above everything else to become business hot-spots in US and India respectively.

Second, US and India are considered to be good markets for products. And also for investment due to high domestic consumption. Anybody will require huge benefit to invest just to export to other countries as almost all the countries provide all possible benefits today. And that benefit can come from low wages or infrastructure cost, but this too dry away as country progresses. The sustainable factor thus remaining is the consumer spending habbit. Low consumer spending is the reason behind many companies leaving Korea and/or Japan, and same reasoing follows for few companies entering India and not China.

Third, cheap hotels. This is an opportunity for the other sectors but a threat to the hotel industry. Few companies are now opting out of Bangalore because of high real estate and hotel room cost. For hotel rooms, Bangalore is now more costlier than London or New York. This makes each business meeting very costly and for companies that do outsourcing work for cost benefit, this factor becomes a huge factor.

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