Where should an athlete be more comfortable? Is it on the field of play or in the confines of the locker room? I admit this is a rather tricky question as it depends on when one is answering this question and the experience and circumstances that dictate it. Most athletes would not hesitate a wink to take the former option but there are times they will find solace in the latter answer, though they may find it very hard to admit. I am reminded of this analogy only because of the repeated outcry about outsourcing.
Once again the Indian government and the so called software industry have gone up in protest over the Ohio government’s directive to avoid outsourcing. Firstly, they have a prerogative to take decisions (and every country / region does and should) and secondly, they are preventing outsourcing; not targeting a country or its business potential! Why is this simple logic so hard to understand for all the intellectual intelligentsia involved with the “potential knowledge economy”? This only goes further to validate Senator Charles Schumer’s remark that companies such as Infosys and the like are “chop shops”. The merit is in the fact that Indian outsourcing industry has yet to progress beyond labor arbitrage; whether it is onshore or offshore. The overwhelming majority of the deals focus on a cost advantage and not on value creation. There is a lot of noise about using Services Oriented Architecture and Cloud Computing but I would be happy to proven wrong that these necessarily do not impact the core processes of the customers; that generates growth to the customer value chain of the customers. If that be the case, such an example should become case for stating the business case; be it for outsourcing or co-sourcing.
But here is the litmus test. The top three companies in the outsourcing business are IBM, Accenture and HP/EDS who have their bets hedged across the world. These companies (especially IBM) take majority of the big business within India. The Indian government despite its huge need for modernization of Information Technology and Systems cannot give big contracts to Indian companies and rely on them to execute successfully on the ones awarded. So who is the Indian government promoting? The Indian companies have not been successful in their acquisitions and establishing overseas presence like how IBM, Accenture and HP / EDS have succeeded in Indian or for that matter, in any part of the world, in localizing their business. India is touted as the growing economy and yet, the business models of the top 5 IT Services companies cannot rely to produce more than 10 – 12% of their annual revenues from their own country. Isn’t this a sad commentary on the intelligence of a country aiming for leadership in the global economy?
Look at the overwhelming evidence. It is the IBM, Microsoft and the Cisco’s of the worlds who has engaged Research Labs in India and are encouraging the Indian talent to step beyond their comfort zone. They are the ones who are realizing the potential of business in the country and pushing the envelope to raise the level of social consciousness while maintaining balance with the local culture. On the other hand, Indian companies have disgruntled employees only thinking about wages and raises because the employers are not thinking beyond the commodity value of its employees. A typical resume of a software developer in the country of an average 5 years experience is a minimum of three job changes; each company engaging the same skills and experience. It is not that the Indian companies have not spent money on labs or such euphoric initiatives; they have not been guided by a vision to produce results that can either provide a transformational learning to their employees or a dramatically differentiating approach to their business model. So we have a government, the industry and a watch dog like NASSCOM all beating their brows to the same rhythm; which incidentally is a pathetic show.
Prof. Jeffrey D. Sachs, Director of The Earth Institute, Quetelet Professor of Sustainable Development, and Professor of Health Policy and Management at Columbia University has a very interesting viewpoint in his FT article dated July 21, 2010 titled “Sow the seeds of long-term growth” (http://www.ft.com/cms/s/0/01d88b16-94cd-11df-b90e-00144feab49a.html) that is relevant to the discussion here. He is vocal about promoting a climate for investment while improving infrastructure and improving human capital concurrently. He is critical of the “stimulus economy” and worries about the budget deficit being created by the Obama government which he believes has been substituted for “Thinking”. To be fair to President Obama, he has come into Presidency at the most difficult period of American history and it is difficult to balance political agenda transformation at the same time. He has created the balance between earning, investment spending with his vision on healthcare, education and now infrastructure (recently he has revealed plans of how infrastructure is key to his overall vision of a vibrant country). It just also happens that he has been stalled by Congress and he is not even half way through his first term. Jeffery Sachs advocates a planning for 3 – 10 years as opposed to a magic wand for 1 – 2 years. This is indeed a valuable advice which not only the Obama government would do well to listen to; but also the Indian government and the Indian Industry in general.
Political populism has compelled Obama to reverse the earlier mentioned equation and put Spending first as opposed to the end of the equation as Earning, Investing and Spending. This is what Jeffery Sachs talks about even a danger of double dip depression, as opposed to coming out of the current recession with valuable lessons learnt and improving on the state of being. What is not to be missed in this economic equation is that earning has to be generated from all the right sources with the right differentiation; as a sustainable advantage and not a temporary sugar surge. A faulty first step would lead to misguided steps in the next two parts of the equation; Investing and Spending.
Here is another litmus test. Of the thousands of computer software professionals / programmers employed by the software industry in India, it would be a surprise if even 20% of that work force exhibits quality analytical thinking. The percentage of lateral thinking would not exceed 5%. There is hardly scope for advancing transformation and innovation from the ranks in a process oriented manner; despite all the lip service that is paid for an evolving workforce. The companies do very little to screen and progress these critical capabilities because it is a numbers game. They are not worried if their attrition rate is 27 – 30% because this has been factored into their cost structure and therefore doesn’t hurt them. As far the government is concerned, the Human Resources Minister of the country will probably not even understand this concept as he is busy propagating and spinning the political agenda on control and de-control of education institutions such as the IIT and IIM’s.
Earnings in India has to be generated from Growing (Agriculture) and Products (Manufacturing) before trading and servicing. The long term potential for the country and the industry in India is to invest in Human Capital that can contribute to the growth. However, the business model and mentality will have to move from bootlegging and trading to producing and creating. Prime Minister Manmohan Singh is in his second term and the forthcoming visit of President Obama to India should be a great opportunity to establish learning between two democracies and a path to collaboration; where both countries can grow. For a change, the two leaders who are intellectuals in their respective fields must engage intellectually rather than politically. America has nothing in common with respect to its political agenda with India and India has nothing in common with the trade and commerce interests with America. The common point of convergence is Knowledge and there must be emphasis on how this can be collaborated upon for creating right earning and investment opportunities that would automatically bring about spending and mutual benefits.