India arguably has the world’s largest educated workforce available at salaries that are still substantially below the benchmarks of developed economies. The availability of economical educated workforce facilitates foreign investors to source international quality services and products at comparatively lower costs.
There have been debates for harmonizing and rationalizing employment laws in India to improve the foreign investment and business climate. No significant legislative steps have however been taken so far, as the mainstream political views are against “hire and fire” policies.
To benefit out of the “cost advantage” of doing business in India, one needs to be careful in compliance with applicable laws as well as the local sensitivities and issues in hiring and rationalizing the workforce.