How to get the best piece of the emerging economy pie
In its July 2012 forecast, Ernst & Young identified emerging market economies (EMEs) as "rapid-growth markets," for good reason. While the Eurozone struggles to get through its crisis, EMEs are expected to not only survive this, but will also consistently expand until 2013 -- when expansion is expected to accelerate.
Countries such as India and the Philippines are now considered centers of excellence for outsourced services in a number of domains. They are an integral part of the global value chain. The promise that the EMEs hold is not limited to its potential contribution to rationalizing the service delivery process. Their vibrant economies are also fueling consumer market expansion. For example, in 2011, Emerging Asia accounted for 14% of the total global spending. By 2020, Emerging Asia's share will increase to 25%, and further increase to 40% by 2030 (Ernst & Young, 2012).
Overall, the numbers are looking good for EMEs. Aside from making up 81 out of 192 countries, and 80% of the global population, EMEs also contribute 53% to the global GDP, 70% of foreign exchange, 12% of the world's equity market capitalization (Forbes). Collectively, these economies are growing at a rate of 4.9%, about thrice as much as the G7's growth rate of 1.4% (Ernst & Young, 2012).
There are, of course, risks associated with moving in to unfamiliar territory. Many multinationals that have made the move to EMEs were able to mitigate the risks and ensure the results through innovative outsourcing. This involves getting a partner with an intimate knowledge of the market and the domain expertise to get things going so you can focus on the front end.
For businesses which are looking for expansion in terms of process, cost realization, or market expansion opportunities it is time to come up with an EME strategy as a driver for growth. It is time you get your share of that pie.