India and China: The largest workforces on the planet

By David Azócar

Some analysts refer to India and China as the dragon and the elephant due to the enormous scale of the nations’ economies and populations. As we enter reach the 21st century, the two Asian giants are beginning to diversify their huge workforces. China is becoming the world’s factory, and India, a leading outsourcing nation.

Chile, for its part, is quite cutting-edge in the services sector (finance, trade, etc.). This sector employs more than 60% of its workforce. Across the world China and India have become the real engine of the economy, highlighting the company manufactured in the first and outsourcing in the second.

China has been growing annually at rates of 9% or above since 1978. This has resulted in a huge amount of agricultural workers migrating into the manufacturing sector. “China has become the primary manufacturing source for the West; and the rest of world, too. The agricultural-to-manufacturing workforce migration has been central (to this entire issue). It's similar to what happened in Chile in the 60s,” says Martin Perez Le-Fort, a researcher at the Asia-Pacific Center (Universidad de Chile). He is also a frequent contributor to this Portal.

“The opening of the Chinese economy at the end of the 1970’s produced a large influx of foreign capital.  Many Western companies also set up factories, which, in turn, generated an increased demand for labor in the sector.” Manufacturing now accounts for 48.6% of China’s workforce. “China is a real magnet for manufacturing sector capital.  However the country's costs are growing. This may cause some of the capital to shift to Southeast Asian countries.  So I believe we will see a steady strengthening of (the Chinese) service sector.”

For its part, the Indian workforce balance has tilted decidedly toward services rather than manufacturing. “The number of university graduates in India is enormous.  Just to give you an idea, they graduate nearly 400,000 civil engineers per year. And this has been so for years. Graduates in the different fields are also English speakers, which has turned the country into a magnet for outsourcing in areas such as call centers and generated a great deal of revenue for the country,” said Sergio Carrasco, a researcher at the University of Chile and frequent contributor on India issues to our Asia-Pacific Portal.

The Indian service sector accounted for 28.1% of its workforce in 2007.  However, it represented the main source of economic growth in the country and more than half of its national income. “There is an increasing development of outsourcing, but it is still not the most important sector.  It can be in the short term, though. Some of the other sectors that are growing very strongly are communications, construction, insurance, IT and information,” states Mikio Kuwayama, a researcher at the Economic Commission for Latin America and the Caribbean (CEPAL).

China and India have the largest workforces on the planet; 803 million and 516 million, respectively. In both countries, the rural-to-urban migration has been a key factor in explaining the growth of manufacturing (China) and services (India).