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| | The Bangalore Business Network Network is not currently active and cannot accept new posts | | How will Indian IT sector tackle this? | Views: 678 | | Jun 09, 2005 4:17 am | | How will Indian IT sector tackle this? | # |
RHA | | China allure grows as India wages rise.
About 40 percent of the companies surveyed plan to shift some technology work to
China in the next three to five years.
NEW YORK: Interest in China as an outsourcing destination shot up over the last
year as wages in India kept climbing, according to a survey released on
Tuesday.
About 40 percent of the companies surveyed plan to shift some technology work to
China in the next three to five years, compared with merely 8 percent last year,
according to Chicago-based management consulting firm DiamondCluster
International's 2005 Global IT Outsourcing Study.
China's largest draw is its labor cost, which can range from 20 percent to 50
percent below India's, said Tom Weakland, who leads the outsourcing advisory
services practice at DiamondCluster.
"China is starting to look like India did 10 years ago," Weakland said. "The early adopters in China have shown some success. The risks are not overwhelmingly more than in some other countries."
Despite lingering intellectual property problems, China has become a strong exporter of software development services. Major services providers such as Accenture Ltd., BearingPoint and India's Infosys are using China to provide a hedge against India.
Countries that appear to have fallen out of favor include Israel and Russia, due to concerns over their stability, according to the study.
The study also found that the number of buyers terminating an outsourcing deal before it expires has doubled to 51 percent, due to either poor vendor performance or a client's strategy change following a merger or the decision to bring work back in-house.
Satisfaction with offshore providers dropped below that of domestic ones for the first time, as the number of buyers happy with their offshore providers fell to 62 percent from 79 percent.
DiamondCluster's third annual study was the first in which any buyers reported that they are planning to reduce their outsourcing spending.
Companies remain concerned about an employee backlash, but worries about anti-outsourcing legislation and political pressure have waned.
"Buyers are not overly worried about the impact of competitor criticism or union pressures on their outsourcing endeavors," Weakland said.
© Reuters
This report is available at
http://www.ciol.com/content/news/2005/105060701.asp?nl=5_212344_Jun7
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Dear members,
I have been predicting correction in Indian IT sector by 2009 as I am aware from my prior experience that the workforce in China is more controllable and disciplined due to the national structure they are in. Businesses ultimately do what they need to be doing to excel and will be least bothered about the society.
These reports and the laid back attitude of the industry to find pragmatic solutions seem to be spelling great threat for the industry which otherwise can retain its edge by taking several measures of which some are being taken by NASSCOM to get enough employable talents to meet the demand that exists while on the other side we have other problems such as rising pay scales that drastically increase costs.
Your comments as stakeholders, please.
Cheers,
Rajesh
Private Reply to RHA | | Jun 09, 2005 5:11 am | | re: How will Indian IT sector tackle this? | # | 
A T M | | >>Businesses ultimately do what they need to be doing to excel and will be least bothered about the society.
Very much aligned with what you say Rajesh.
Businesses can go to any length and surpass boundaries if they need to.
And more over it's a consumer wave. Consumers will have a bigger say than government bodies.
>>employable talents to meet the demand that exists and problems such as rising pay scales.
Employable talents is definitely a concern, more so when many are investing in bringing up B-type-schools, grossly ignoring the elementary education.
Rising pay scales, are we being paid on a higher end for our kind of jobs ?! This is definitely debatable...though my savings account dries up in a week's time after 31st :( Private Reply to A T M | | Jun 09, 2005 6:16 am | | re: re: How will Indian IT sector tackle this? | # |
RHA | | Hi Dilbert Fan AKA Arvind TM,
>Rising pay scales, are we being paid on a higher end for our kind of jobs ?! This is definitely debatable...though my savings account dries up in a week's time after 31st :(
Moore's law that drives Intel's business is applicable here too :-)
http://www.intel.com/research/silicon/mooreslaw.htm
Pepsi puts it in a better way. "Yeh dil maange more"
Earnings vs Expenses equillibrium is beyond the scope of "Roti Kapda aur Makan"
Yes. I agree fully with you that it is debatable :-)
Cheers,
Rajesh
Private Reply to RHA | | Jun 09, 2005 4:42 pm | | re: How will Indian IT sector tackle this? | # |
X Y | | One way to tackle this is to shift to talent farming instead of talent acquisition. Today many companies are trying to go out and buy talent, driving competition and salaries up across the industry as there are very few employable people out there (I interview on an average 48 people to fill one position). If more companies invested in farming talent (pick from college, train, use-and-throw after 3 to 4 years), then we can keep costs low and businesses in India. We are not likely to run out of freshers coming out of college, with Indians reproducing like there is no tomorrow.
The trick is to use the more experienced talent you already have to create robust repeatable processes, so we simply plug people in and out. Next time someone demands more pay than the intrinsic value of the work he/she does, they can be shown the door and filled with a new kid off the block, the nature of the process built will ensure BCP.
Harsh pill, bitter for many, but gotta swallow.
~K Private Reply to X Y | | Jun 13, 2005 8:24 am | | re: re: How will Indian IT sector tackle this? | # |
RHA | | I am surprised to hear this from someone who interviews 48 people to fill one position. Is your company doing something about Talent farming? How many other companies are doing something on this?
I have seen Infy huge campus in Mysore and sure that seems like a "Talent Farm" with intellectually potential studs and stallions that are held in the stable. Have heard Wipro does this too. Isn't it the same many companies term as "Campus Recruitment"? It's there, but it's not there as much as it should have been to make the talents deployable immediately.
I still am not able to figure out what those cornerside IT training institutes, several educational institutions churning out MCAs, BEs, BTechs, MSs, MBAs do with those kids that spend in lakhs. The irony is, these very kids begin without knowing what they are talking on the subject to demand good amount again for the employer to train them for a few more months before they are production worthy.
When they become production worthy they become one among those 48 you interview and there are 100 companies hunting these 48 and they fit somewhere there for a better scale while the scarcity still remains.
The question is who bears the cost of farming? How much of it should be borne by the government or the industry collectively and how can that be distributed amongst individual companies who are going to reap the benefits prorata?
"Talent farming", though not a bad idea, seems like a distant dream in the era of uncertainties that are filled with booms, busts and bubbles!!
Thanks for sharing the harsh, bitter pill. Have swallowed only to see the larger and wealthier neighbour getting cured :-)
I feel the industry should collaborate with academies to get the right talents out and ready by engaging them heavily on the realtime production activities that are ongoing or upcoming in the industry.
Cheers,
Rajesh
Private Reply to RHA | | Jun 13, 2005 10:20 am | | re: re: re: How will Indian IT sector tackle this? | # | 
Sunil Uthappa | | Collaboration between Academia and Industry is key to the demand/supply situation. However would organizations like GE take to Talent Farming is the issue, the Wipro's and Infy's would...it's core to thier asset base. What is core for one org may be a support function for the other. What strategies do companies need to implement to attract and retain talent will always be a proverbial ???
A classic case of colloboration is b/w IIM-B and a few corporates on Executive management programs rolled out for functional managers to hone thier skills to take on senior roles is a great initiative.
There needs to be traction b/w companies to indentify core skills and map them towards a unified curriculam to approach academia on what training / methodology is a suitable fit at a entry level.
Cheers
SunilPrivate Reply to Sunil Uthappa | | |
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