At the recent Nasscom executive council retreat held in the picturesque
surroundings of the Kumarakom lake resort in Kerala, I heard a truly amusing
story from a senior member.
A delegation from a major American insurance firm, visiting Bangalore to meet
some of the IT firms and develop its India strategy, was looking forward to
catch a glimpse of the famous Indian cows. Soon enough, while moving around in
two cars, members sighted a buffalo meandering on a street with a young lad
sitting on top. As cameras began to whirr and cell phones were used to express
their delight to their families and friends, lo and behold: the lad astride the
buffalo whipped out his own cell phone to take a call–the visitors’ jaws
dropped in sheer amazement. It was bovine delight for the foreigners.
As we step forth into one more new year, this incident is a true metaphor for
what India has come to represent–the best of the old combined with the most
modern of the new world. After three years of writing in this column about the
proximity of India’s tryst with a global destiny, it seems that the days of
reckoning are now just round the corner. With many industry segments (pharma,
automobiles, et al) learning from IT’s success and attempting to replicate it;
with the stock market rediscovering some frenzy; and with global predictions
that the next few decades will see the Brazil, Russia, India and China (BRIC)
economies ruling the world, there is an air of confidence and a feel-good factor
that will make 2004 a watershed year in the business history of India.
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For the services sector in general and IT services in particular, there are
many reasons why success is almost assured. The first and most compelling reason
is pure demographics–a Boston consulting group study has revealed that by the
year 2020, there will be a deficit of 17 million in the working age group in the
US alone, of 10 million in China, nine million in Japan, and two million or more
each in most of the European economies. Contrast that with the expected
potential surplus in India–a whopping 47 million. Is there a doubt about the
flow of jobs to India in the coming years?
The mitigating factors? Well, Pakistan will have a surplus of 19 million (no
wonder John McCarthy of Forrester feels that they could well be our biggest
competitor in the BPO business); Philippines will have a surplus of five
million, Bangladesh of seven million; Egypt and Vietnam of four million; and
Malaysia, Indonesia, Iraq, Turkey, Mexico and Brazil of quite a few millions.
Beyond the hoopla that is raised over the emotional topic of offshoring in
some quarters of the Western world, there is a mature realization coming in that
offshoring goes beyond mere labor arbitrage–it provides access to a global
talent pool, ensures quality and productivity gains, provides time zone
advantages and compresses time through development, testing and support across
globally dispersed centers. Industries that have outsourced are already becoming
more competitive than others. For instance, the financial services industry in
the US–an early mover into offshoring–has saved over $6 billion in the past
four years and established a cost base that’s nearly 10% lower than its
European counterparts through productivity gains of over 15%.
At a recent meeting of the Pune Promotion Council, which addresses
opportunities ranging from automobile components to floriculture to software to
the Bal Gandharva and Shaniwarwada festivals as the means to put Pune on top of
mind for businessmen and tourists, it was amazing to see how each participant
could find something special about this pulsating metropolis, that complemented
others’ views and yet brought out a new facet of the city–mutually exclusive
but totally inclusive. If you enlarge the canvas and put all the major Indian
advantages together, imagine the final picutre that will emerge! Is that the
India of our dreams? Not yet, but we’re fast getting there.
Ganesh
Natarajan
The author is deputy chairman & managing director of Zensar Technologies
and chairman of Nasscom’s SME Forum for Western India