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A Year of Promise

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DQI Bureau
New Update

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.

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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.

“By 2020, India will have a surplus of 47 million in the working age group, while the US and China will suffer from huge manpower deficits”

Ganesh

Natarajan

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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

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