While US, China, Israel and even smaller countries are busy in harnessing their youth to build something innovative, the Infosys, TCS, Wipro and others are just doing mundane tasks that the West thinks is not worth their time. That is fine, but are Indian IT companies then worthy of being entrusted with large and difficult domestic projects like Aadhaar and other government databases?
According to NASSCOM, the IT industry contributed about 7.5% of the GDP. For FY2012, the net revenues were $100 billion. It is also said to employ 2.8 million people directly and 8.9 million indirectly. Indian IT companies compete for deals along with global peers for outsourcing and our companies have the cost advantage. They would get the project executed in India and deliver the end product to the client. This is a win-win situation. The client can get the work done to his satisfaction for a low price. The IT companies earn profits by two means labour arbitrage and dollarrupee arbitrage. The software developer benefits by having a well paid cushy job with occasional overseas opportunities. This industry offers well paying jobs to a large number of young people. The career is also attractive as it provides overseas opportunities. All in all, this paints a very attractive picture. Our government is happy because it has got exports to cut the current account deficit and more jobs are being created. So everything should be all right with this industry. Right?
However, there is a different aspect to this glittering story – the core of which is what is being outsourced and how the country benefits. My issue is with how we have transformed outsourcing. Outsourcing is good as long as it is a level playing field for both the parties. Currently, outsourcing is being seen as doing the core work in-house and outsourcing the menial task to India. India is becoming a dumping ground for all the work that the West doesn’t want to do. The West thinks “I have developed this software but how do I test it?... Ok. Let’s outsource it to the offshore team”. “Calling our clients and reminding them of their mortgage? Let’s hand it over to the Indians.” When it comes to slightly value-added work, they say “We can’t trust the offshore team to do this task. They are not competent enough. Let’s get it done here and get the documentation done by them”
I feel that India shouldn’t be allowed to become a dumping ground. Yes, Indian labour is cheap. Pay them the market rate at India, no problem. But to say that Indian labour is incompetent and thus they should just do these sets of tasks is grossly wrong. Unfortunately, our IT companies are falling head over heels to grab more deals of this kind.
We suffered a brain drain in the ‘80s and ‘90s. We are facing a different kind of problem now. Every year lakhs of engineering graduates join these IT companies. Little do these graduates realise the kind of work that they are going to do. Most of them don’t ever get to do real engineering. They are run through a crash course of few months and then allocated to projects. Not everyone is able to learn it all in the training. Some of them understand this and then move on to better companies, which allow them to do use their skills well. Also their low cost model can’t retain a skilled employee as he is likely to find greener pastures soon. Although no one has ever thought about it, can we imagine a day that when this current set of engineers retires what is that they have to their credit? Did they build something significant? What use did they put to their education they learnt in college? To develop software which would hardly see the light of the day or one which would silently die as it doesn’t serve the intended purpose?
In fact, thanks to intense competition, Indian IT companies will just grab any contract. They don’t care as to what is the nature of the project. They are ready to do tasks like infrastructure management, website management etc. Now that since the pools are drying in the West, they are looking for similar contracts in India. Does by any means handling passport application look like a contract to brag about? Even our government blindly trusts the so-called leaders of this industry.
One should look at US and China. US houses some of the best technology companies. Search engine, social networking, e-commerce, cloud computing and mobile are all that have been brought to the masses by companies based in US. Can our IT companies boast of building something world class? Isn’t our government doing a grave mistake by entrusting the monitoring of UIDAI database to companies which lack the credibility to maintain such a system?
Even China, whose internet regulations are very tight, has its own search engine and social network. While we Indians have always joked saying that China has not adopted outsourcing due to language barrier I feel that it is more a matter of pride for the Chinese to not compromise. The Chairman of a large IT company keeps bragging about what we need to learn from China whenever he goes to a college to deliver a lecture. I wonder what he has learnt from China. The Chairman and the cofounder of the company are from a prestigious college. However the same college doesn’t allow this company for its campus interview because the students of this college realise that they deserve much better. Doesn’t that send a message to them?
Even smaller countries like Israel and a host of Eastern European countries are miles ahead of us in terms of technology. While these countries are busy in harnessing its youth to build something innovative, we Indians are just doing mundane tasks just because the West thinks it is not worth their time and the IT company sees a big dollarrupee arbitrage and labour arbitrage in this. In fact now, we are in the league of countries like Vietnam and Philippines which are proving to be low cost outsourcing destinations. Our IT companies instead of learning a lesson from this and adopting new technologies will open a shop in Vietnam and Philippines.
Indian labour is well-skilled. They just don’t have the right exposure. There is a disconnect between what we learn at our colleges and what actually happens in the industry. Most of the graduates dream of working for big companies but lack innovative thinking. It has become a rat race of sort where every corporate house wants to have a slice of the pie.
If coal, telecom spectrum etc are natural resources, then a country’s human resources are the most valuable assets that it possesses. They drive its economy. Using these resources for such menial tasks should be labelled as a grave crime. NASSCOM the voice of the industry is not any better. It is more a lobby as is FICCI. They raise a hue and cry over a visa restriction but have nothing to say when a ground-breaking technology is released. NASSCOM will organise a string of events to cater to the IT industry but has very few events for startups and product development. This is why a group of companies, which is focused on product development, has parted its way to create a separate group called ISPIRT (
www.ispirt.in). Their focus is on innovation and product development.
This sector has created a vicious circle. There are many dependent sectors on it. Housing sector on metros depends on workforce of this industry. The same goes for the auto and consumer goods industry. An entire army of security guards, support and infrastructure staff is deployed in the offices of these companies. A host of mutual funds and insurance companies have invested in these companies. If there is a problem in the West the whole system comes to a halt. Do we plan to build an economy around this?
Our country has a young population. We should harness it to good use. We need to encourage innovation, adoption of new technologies and product development. Among the IT exports only 20% is constituted by products. The young graduates and the adults alike have to be taught that working for a big company is not the ultimate achievement rather building something disruptive is.
Having said this I would also say there are companies which take the outsourcing route but do very good engineering projects. Likewise, not all product companies are good. There are companies which are product-oriented but their engineering doesn’t live up to the mark.
I would like to reiterate that outsourcing is not the problem. The problem here is the greed to earn profits at the cost of quality (of both the software and developer). Some MNCs have tried to copy the outsourcing model by setting up shops in India. Initially the staff was doing mundane tasks at India, however of late the MNCs are offloading some real work to India. This is a welcome step but we need more of this to happen.
Comparison with US companies should be done. In technology sector geography doesn't matter. While Google and Amazon started after our IT bluechips, they are miles ahead in both technology and financially.
If China can have its own social network - why can't we? Free speech laws are more tight there.
Problem is Indians are not looking inwards. There can't be a world-class product developed unless there are customers. India had very less penetration of IT and even among them very less for e-commerce (leaving IRCTC) etc. We can build social network as for that we may get large audience but who is going to pay? We enjoy Facebook because it is free. How many would be willing to pay if it becomes paid?
Fortunes of IT industry is linked to fotunes of Indian society at large. IT industry cannot excel when Indian population is not excelling.
Till that happens let's keep the iron hot by doing outsourced work.
Just open any technology book and look at the Acknowledgements section. You will see a string of American names, European names, Jewish name and Chinese names. There would be a occasional mention of a few Indian names. This guy would have either studied at US or was working there (not as an employee of our bluechip). Why is this? Are we just meant to do some grunt work?
I would suggest that you do some research about software companies in India. There are world class products from India. For example Zoho - similar to Google Docs. Your customers need not be Indian. You can have global customers and still not do grunt work.
Their reaction? To immediate start trolling the writers with nasty comments. Some "IT experts" are not even wise enough not to troll from their official email IDs. Others claim they are not from IT, but the kind of nasty aggression they reveal reeks of vested interest -- otherwise why would they emerge from nowhere and discover Moneylife only when there is criticism about the IT blue chips?
Maybe the IT industry, which has been feted for too long for their allegedly high governance standards need a reality check really quick!
In fact this is the first time Indians have got to know about it. Till now this was happening in the West and the web was filled with similar discussion on outsourcing. Now that West is slowing down and these companies are looking for projects domestically we are getting to know of these facts.
The article, no where has discussed that how to make youth of India not to do mundane tasks. Where the problem starts? At the school level. Education. That needs to be fixed, first.
So, overall, still, it's some handful of corporations, who owns India, and they still are dynasty, and media would always talk about their interests first, and not of common man.
i dont see any economically sound idea in the whole rant/article.just appeals to authority and nationalism.?
for a couple million people to have broken out of the shackles of poverty is achievement enough.if you know how to make world class products,go ahead and do it.
As far as world class products are concerned, we are already doing it. Just that they are not in the limelight.
Few students from Mumbai have created m-indicator, an app that shows timings of all local trains. At present there are over 20 lakh users for it. This shows nothing is impossible, unless you want to do it.
Lets talk about SECURITY aspect:
- CCTV Monitoring : So many TERRORIST attacks happened yet our Big CITIES like MUMBAI/PUNE/DELHI lack of CCTV Monitoring System in place.
Indegenious Solution: We have so many WORLD CLASS institutes (IITs) Govt can ask them to come up with an UNIQUE SOLUTION forREAL TIME CCTV Monitoring Solution using COMMUNICATION SATELLITE.
(Imagine all CCTVs relaying visuals to CONTROL CENTRE via SATELITE in REAL-TIME). It can be useful for TRAFFIC CONTROL/VIGILANCE by POLICE as well.
Hurdle: POLITICAL VISION and Will Power. If it would be developed Indigenously how dey would get KICKBACKS to fill der SWISS Accounts.
- DRDO & HAL : Defence Organizations like are not Operating upto der POTENTIAL. GOVT is not at all worried about HAL's performance rather dey are hAppy bcoz as long as HAL & DRDO underperform they can HAVE FOREIGN DEALS .
Undersuch circumstances what can be done!!!!!!
Similarly take any field we can SURELY MAKE A DIFFERENCE., if CHANNELIZED WITH A PROPER VISION.
-On Dumping Yard : Professionals working in IT industry are from Middle class background, with higher aspirations to Live a happy life from every prospective.
Govt doesn't promote any R & D activities, only busy in SCAMS with ZERO VISION for DEVELOPING INDIA.
Leaders like APJ Abdul Kalam & MODI has made a difference with their VISION.
Don't Expect IT Companies to do any such INNOVATIVE WORK when they facing so much of COMPETITION to manage Revenue/employee & customers.
I have been in touch with People who have BRILLIANT IDEAS & would like do Something. They didn't find support very often, in countries like US/ISRAEL support is Enermous.
Now a days Companies like TECH MAHINDRA & MAHINDRA SATYAM combine are promoting INTRA-PRENEURSHIP., ENCOURAGING Employees to come up with INNOVATIVE IDEAS/SOLUTIONS.
They have well defined schemes to Fund such projects.
-About MCA21 being DOWN
Its better to question MCA Officials bcoz being a CLIENT they have the RIGHT to take any STEP on VENDORS causing LOSS.
Request: Do not giveup confidence on Indian Professionals and BRAND INDIAN Companies !
Second biggest reason of not having that kind of companies is legging of manufacturing sector .. We get all our electronics from LG, Samsung, Nokia. All our defense purchases are imported. For what sector should we produce that top notch software.
First, second and third reason is govt. They never have long term view. If we had good manufacturing sector, if they would have promoted innovation at least in telecom. etc ..
Forth : We are not yet there .. The number of product I purchased online in US ten year back I still need to reach to that level in India.
You see, majority of India is owned by small faction of corporate elites, who have managed to sway their way in the politics also, and they have been the driving force behind the future of India, because, only corporates want an united India, which serves their interest to exploit masses and loot resources.
All of us want to bring about new things and make huge amount. We look at Bill Gates /Steve jobs, serge etc and we look at their success, not look at the hard work, setbacks.
Success has many friends, failure has none. This holds mostly true. Life of safety, salary closes our mind. The society doesn't encourage trying out, neither do schools, colleges. Passing with higher marks is important than using different dimensions of intelligence.
'A' coach can help make A player. Our schools, colleges with some exceptions are full of B coaches. What can we expect?
Wonder why lots of Indians do great abroad?
A flower needs enough of sunshine, water, soil to grow. We don't have such ground. Some people realize this, went abroad and made it - including those who didn't go to schools, colleges or had poor support.
Can the parents, teachers, society try not to discourage the children from doing what they want to do?
And for now, we lack gutsy people everywhere.
a) Costs
b) New players
You will never replace the maid you have for washing dishes unless it becomes too expensive. Because she does work you don't want to do. That's why Indians will always be code coolies if we are inexpensive. We are inexpensive because the salaries in dollar terms are very low. If that equation changes - without the RBI poking its nose into the market - then the costs will go up automatically.
Second, all disruption is caused by new players. You can't expect the TCSes and Infys to fix things, to get rid of their golden egg producing goose. New companies should come that get new business. We should actively remove any silly barriers to entry - and there are very few today.
However the cost equation is already changing. The bluechip IT companies are scouting for low cost offices outside India. And irrespective of geography, a good software developer will anyway switch for a good paying job which his skills are worth for.
Your point about disruption being caused by new players alone is only half right. Do you think that Apple and Google are new companies? What about Amazon? Yes it is true that new players are causing disruption and this is also true in India. Look around and you will see many small companies which are doing some innovative work that too from India.
I don't expect TCS or Infy to fix things. To fix things is our own responsibility.
No doubt that there are innovative companies in India.
In general when companies grow big they lose track. Not sure why is this. Could be due to greed of promoter or could be shareholder pressure. There are very few companies in this world which despite growing big still remain true to their spirit.
Our companies are still stuck in the world of Java, .Net and etc, while the West is exploring and developing on newer languages and platforms.