A question like this will make people upset, especially those who are directly or indirectly dependent on the outsourcing sector in India. But the fact remains that there are indications that the bubble may burst, soon if not later, if required measures are not taken now. If you are an employee of an outsourcing firm, you would be hearing some gossip doing the rounds in your cubicles. So are there any solutions to this predicament? A big YES would be my answer. So there is some reason to smile now!
Some years ago, a new job opportunity had opened for many youths in India, with the dawn of outsourcing. This was the boom time as many fresh graduates were able to earn handsome salaries. So what has currently gone wrong in this promising path? I have some answers to this question like, India becoming an expensive outsourcing destination because of inflation and high attrition rate, the competition from latest entrants is fierce, and finally, Barack Obama, the Democratic presidential candidate.
Indian job market has truly become expensive and some studies prove it. According to a recent report from London based human resources firm ECA International, average wages at multinationals in India are likely to jump 14% this year up from 12.6%, putting India at the top of a ranking of 47 countries worldwide for the second year in a row. "Salaries in India are catching up to developed nations at a faster rate (than in many other Asian countries)", says Lee Quane, Hong Kong-based Asia general manager for ECA. He feels that the culprits for this salary rise are inflation and attrition.
Now let’s look at the other roadblock, which is the tough competition, India has to face in the global outsourcing market. I will give some statistics to this statement of mine. Focused on UK's top IT service providers, a study by Pierre Audoin Consultants (PAC) a market research firm showed that China, Morocco and Hungary are the new locations of choice to set up offshore sourcing centers.
"India's position as the premier low-cost IT sourcing centre is not under serious threat in the near term. But what we are seeing is vendors are looking to reduce their reliability on India's heated labour market," Nick Mayes, a senior consultant at PAC, said in a statement. SAP AG has announced their plans to expand their BPO operations in countries like Eastern Europe and China. The reason behind this switch is that the company has claimed that outsourcing work to India is proving to be pretty expensive. So it seems that the stiff competition is mainly because of the ‘heated labour market.’
So finally, we have some politics in this story, with Obama’s views on outsourcing. Though it needs to be seen if he emerges as the most powerful man in the world, let’s currently focus our thoughts on his views. We know that Obama has been regularly playing the anti-outsourcing card since he entered the presidential race. Recently in his speech, he added fuel to the fire by saying, "....Unlike John McCain, I will stop giving tax breaks to companies that ship jobs overseas, and I will start giving them to companies that create good jobs right here in America."
Yes, that is an offensive comment by Mr. Obama. Now let’s see what the Indian reply, towards this comment was. NASSCOM President Som Mittal said Indian software exports are unlikely to be affected by this as offshoring is a key economic decision for US companies. Mittal feels American companies will themselves favour outsourcing. "US companies are facing shortage of talent to drive the growth. It is in their interests," Mittal said. Now, don’t you think that it is really nice to hear these words from him? Well, I think that should keep Obama at bay, at least for sometime though.
You may think that is a lot of problem? I feel the problems faced by Indian Outsourcing are mainly because of the soaring salaries and attrition rate, as I have pointed out earlier. This has led to many questions about the future prospect of the outsourcing industry in India including, “Is Indian Outsourcing on its Deathbed?”
I feel the companies should start setting up their facilities in smaller towns and villages rather than the big cities. It is a strategy that has been obvious to most industry leaders for a long time but has not yet been adopted widely. This will create more workforces, because a majority of our compatriots are in the villages. When the companies take the jobs to the rural masses it will create a world of opportunities to them. This will bridge the gap between supply and demand of labour. It will invariably help in controlling the rising salaries and attrition.
An interesting experiment is being conducted by Satyam Computer Services’ founder, Ramalinga Raju. His philanthropic endeavor GramIT aims to ship business-process outsourcing projects to some of the 600,000 odd villages in India, dropping the cost-structure further while creating jobs in India's poverty-stricken heartland. GramIT employees earn $1,000 a year versus the $10,000 to $15,000 that urban employees at outsourcing companies make.
GramIT's attrition rate is close to zero. Employees successfully take jobs such as data entry and transaction processing. Seven such centers are operating in Andhra Pradesh and 10 more are slated to start up. Each center averages 70 to 100 employees and is often the pride of the village. Even the likes of HDFC Bank and Tata Group have taken up initiatives to set up rural BPO.
I think GramIT's model can become the survival formula for the low end of the Indian outsourcing industry. If the cost structure is pegged at the right level, India can also do work for other emerging markets. And, more important, India can do work for itself.
Thursday, September 11, 2008
Wednesday, September 3, 2008
The Leader in You
There can always be a question arising in our minds, as to who can be considered as a leader. Typically leaders are considered to be those, who lead a group towards achieving certain goals, they have a command over the whole group and it is their decision that matters. There have been many leaders in the past who have created history by their leadership skills.
Is it the physical or the mental attributes that determines a leader’s position?
Mahatma Gandhi, was a leader responsible for creating a free India, sixty one years ago. He was a person who did not have a physical outlook, which would have been associated with a leader of his status. During his childhood days, Gandhi was an extremely scared boy. He was an average student, who did not have good communication skills. He could not boast of a family with famous personalities. This proves that a person’s physical attributes doesn’t determine that he is a leader.
What did Gandhi possess in order to be a leader?
He was an example to show that anyone can be a leader if he aspires to be one. This creates a whole new dimension for everyone to be a leader. This is what open source leadership is all about, here everyone are leaders and all can be decision makers just like Gandhi whose decisions changed a whole nation. It is a practice of shared ownership, there is no single leader who is the decision maker. All the members of the group or organisation have equal power to voice their opinions. They are the ones who facilitate the smooth working of the group by encouraging the fellow members.
“In open source leadership everybody are part of the vision”, asserts Sangeeth Varghese, Founder Director of LeadCap, an organization which spreads the message of leadership. They spread the message of leadership, who irrespective of facing failures should go ahead in achieving their goals. He says, “A place where open source leadership is followed is more of a movement than an organisation”.
How practical is this kind of practice?
Southwest Airlines is one of the examples, where employees played the role of co-owners. They were given power to take decisions in times of crisis. This system saved a lot of time and even the customer was satisfied with the prompt working of the staff and services. It should also be noted that the airline adopted the first profit-sharing plan in the U.S. airline industry in 1973. Through this plan and others, employees own about 10 percent of the company stock Today, Southwest Airlines is one of the world's most profitable airlines and in January 2008, posted a profit for the 35th consecutive year.
Southwest maintained excellent customer satisfaction rating in 2006, according to the United States Department of Transportation (DOT) year end operating statistics, Southwest ranked number one (lowest number of complaints) of all U.S. airlines for customer complaints, with 0.18 per 100,000 customers enplaned. Southwest Airlines has consistently received the fewest ratio of complaints per passengers boarded of all major U.S. carriers that have been reporting statistics to the DOT since September 1987, which is when the DOT began tracking Customer Satisfaction statistics and publishing its Air Travel Consumer Report.
Linux, is one of the most prominent examples of open source development, typically all underlying source code can be freely modified, used, and redistributed by anyone. The primary difference between Linux and many other popular contemporary operating systems is that the Linux kernel and other components are free and open source software. Linux is not the only such operating system, although it is the best-known and most widely used. Some free and open source software licenses are based on the principle of copyleft.
This kind of open source policy by Linux makes everyone who involves him with a Linux project, a leader. He has the freedom to take his decisions in creating the software which he feels interesting. He does not need a higher authority who takes decisions for him to develop his software. Linux only facilitates the ‘Leaders’ in realising their goals, by giving them a platform.
Even in cricket, Sourav Ganguly, the former skipper of Indian team used to follow this system. He gave freedom to his teammates, they were given the freedom to do what they like in the dressing room. But, when they get into the field they focus on the game. Every player knows the importance of playing well on the field, hence they contribute to the team’s performance. This method of leadership by Ganguly has been very much valued, because the kind of success the Indian team experienced under his captaincy is huge.
Can this leadership be practiced in big organizations also?
It becomes difficult to emulate this kind of leadership in big corporations because there the financial bottom-line is very high and there are many people involved in the working of such an organisation. In these types of organisations closed source leadership is ideal, where traditional hierarchical leadership is followed.
Whereas, in a start-up venture, open source leadership is more practical. Here there is less number of people involved and even the financial targets are not very high. In these companies there needs to be an environment wherein everyone’s opinion is valued. Here everyone is involved equally for the growth and there is scope for more innovations in policies and strategies of the organisation. Each person would contribute in different ways to achieve the common goal.
Is it the physical or the mental attributes that determines a leader’s position?
Mahatma Gandhi, was a leader responsible for creating a free India, sixty one years ago. He was a person who did not have a physical outlook, which would have been associated with a leader of his status. During his childhood days, Gandhi was an extremely scared boy. He was an average student, who did not have good communication skills. He could not boast of a family with famous personalities. This proves that a person’s physical attributes doesn’t determine that he is a leader.
What did Gandhi possess in order to be a leader?
He was an example to show that anyone can be a leader if he aspires to be one. This creates a whole new dimension for everyone to be a leader. This is what open source leadership is all about, here everyone are leaders and all can be decision makers just like Gandhi whose decisions changed a whole nation. It is a practice of shared ownership, there is no single leader who is the decision maker. All the members of the group or organisation have equal power to voice their opinions. They are the ones who facilitate the smooth working of the group by encouraging the fellow members.
“In open source leadership everybody are part of the vision”, asserts Sangeeth Varghese, Founder Director of LeadCap, an organization which spreads the message of leadership. They spread the message of leadership, who irrespective of facing failures should go ahead in achieving their goals. He says, “A place where open source leadership is followed is more of a movement than an organisation”.
How practical is this kind of practice?
Southwest Airlines is one of the examples, where employees played the role of co-owners. They were given power to take decisions in times of crisis. This system saved a lot of time and even the customer was satisfied with the prompt working of the staff and services. It should also be noted that the airline adopted the first profit-sharing plan in the U.S. airline industry in 1973. Through this plan and others, employees own about 10 percent of the company stock Today, Southwest Airlines is one of the world's most profitable airlines and in January 2008, posted a profit for the 35th consecutive year.
Southwest maintained excellent customer satisfaction rating in 2006, according to the United States Department of Transportation (DOT) year end operating statistics, Southwest ranked number one (lowest number of complaints) of all U.S. airlines for customer complaints, with 0.18 per 100,000 customers enplaned. Southwest Airlines has consistently received the fewest ratio of complaints per passengers boarded of all major U.S. carriers that have been reporting statistics to the DOT since September 1987, which is when the DOT began tracking Customer Satisfaction statistics and publishing its Air Travel Consumer Report.
Linux, is one of the most prominent examples of open source development, typically all underlying source code can be freely modified, used, and redistributed by anyone. The primary difference between Linux and many other popular contemporary operating systems is that the Linux kernel and other components are free and open source software. Linux is not the only such operating system, although it is the best-known and most widely used. Some free and open source software licenses are based on the principle of copyleft.
This kind of open source policy by Linux makes everyone who involves him with a Linux project, a leader. He has the freedom to take his decisions in creating the software which he feels interesting. He does not need a higher authority who takes decisions for him to develop his software. Linux only facilitates the ‘Leaders’ in realising their goals, by giving them a platform.
Even in cricket, Sourav Ganguly, the former skipper of Indian team used to follow this system. He gave freedom to his teammates, they were given the freedom to do what they like in the dressing room. But, when they get into the field they focus on the game. Every player knows the importance of playing well on the field, hence they contribute to the team’s performance. This method of leadership by Ganguly has been very much valued, because the kind of success the Indian team experienced under his captaincy is huge.
Can this leadership be practiced in big organizations also?
It becomes difficult to emulate this kind of leadership in big corporations because there the financial bottom-line is very high and there are many people involved in the working of such an organisation. In these types of organisations closed source leadership is ideal, where traditional hierarchical leadership is followed.
Whereas, in a start-up venture, open source leadership is more practical. Here there is less number of people involved and even the financial targets are not very high. In these companies there needs to be an environment wherein everyone’s opinion is valued. Here everyone is involved equally for the growth and there is scope for more innovations in policies and strategies of the organisation. Each person would contribute in different ways to achieve the common goal.
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