In the last two posts we saw the effects of the IT outsourcing wave- the good and the bad. Quite honestly few of the comments of the last one were perhaps more interesting than the article itself!! Please keep them coming. Let us now have a look at the final part of the series.
THE UGLY:
The earliest of the employees of these firms were from coveted institutes like IITs, IIMs, IISc and the like. So there was usually a sense of pride among the IT population that only the best can possibly make it to the IT industry- a feeling that has still not worn off among the regular engineers, years after the truth has collapsed. Companies like Infy, TCS or Wipro would go to the campuses and select just a dozen back then. Things have changed now. The recruitment strategy of these companies is now nicknamed Truckload Recruitment in view of the numbers they recruit. Their motto – Leave no one behindJ. Getting back to the point of damage, these IIT and IISc guys were supposed to be hard at work in some research and development or doing high level analysis that really requires their level of intellect. I still remember that IIT and IIM guys used to leave the country in large numbers as soon as they were done with their graduation to work in high level firms like GE or McKinsey. A lot of them had also started ventures in Silicon Valley and went on to become big names. Slowly these outsourcing Gurus starts stalking these campuses in search of bright minds by making promises like appraisals and onsite opportunities. Many fell for this; little did they know that the job required them to switch off their brains- something that landed them in IITs or IIMs. We still have quite a crowd of these guys although a bit depressed feeling stuck here. Now THAT is what I would call wasted intellect. However, it is also comforting to know that bulk of this crowd have now entered managerial ranks.
The damage to the US economy was no little. Thousands of American computer programmers were getting laid off because their roles were being ‘Bangalored’ – a term to mock outsourcing. The guys at the other end of the world were hardly passionate guys with little or no knowledge of the business ramblings and the importance of their work- a problem that continues even today. There’re hundreds and possibly thousands who would very skillfully do their jobs without the faintest idea of why or when. And now the problem is being compounded with the recession. Already millions have lost their homes and jobs, outsourcing is only going to further their misery.
So what about our own economy? By now, our stock markets are heavily dependent on stocks like Infosys, TCS or Wipro. A rise in Q3 earnings would send the whole market to dizzy heights. A small rumor about a loss or staff downsizing would send the stock market plummeting. So it is only goes beyond proving the fact that we are tightly coupled with the outsourcing biz. In other words, we still need some American masters to pay for our food. We have truly become a global back office. We have very few stocks that hold out on their own and do not move in the direction of IT stocks. Talk about dignity of labor here! Should we be forever dependant on the low level work of some other country? Are we not educated or intelligent enough to create jobs for own selves and our people? It would be truly a matter of national shame if we cannot do so.
CONCLUSION:
Every dog has its day. IT has had its golden years. My personal view is to take the focus to some other sector before IT turns toxic and bleeds the economy of its juice. Indians need to be more balanced in choosing their careers. Herd mentality is NOT the way forward if stability is to be taken into consideration. IT companies will only survive if they convert from a purely services oriented biz to product biz, which at the moment doesn’t seem to be happening. The bottom-line here is that if you’re truly interested and are good at IT, you will survive any storm. On the other hand, if you belong to the majority of us, I would just say that it’s high time we did some introspection and found out what we want to spend the rest of our life doing. The choice is yours!
Also read:
Another very interesting article:
The Coming Death of Indian Outsourcing by Sramana Mitra at Forbes.com
herd mentality has always been a problem here. Everyones an engineer or a doctor. Sometimes it feels like there is no other safe career. Very true that engineering lost its glamour. Now its the MBA trend. Everyone is doing MBA these days.
Comment by Kenney Jacob — February 9, 2009 @ 3:43 am
I agree to a point here!! Now every tom, dick and harry can become a software engineer!!! Now its the time to do some house keeping..
Comment by Shoban — February 9, 2009 @ 9:57 am
I dont think that outsourcing is any kind of master-slave realtionship.Its business right?So see it as business.
(Even the giant ibm has its outsourcing division which provides service to companies all over the world,is ibm a slave of a company which out sources to it?)
And about wasted intelluct…People generally go where they get easy money.Only few people think beyond that,and i am sure they are not currently working with infy or tcs or wipro.
Comment by Dhanesh — February 9, 2009 @ 10:11 am
Keeney,
For a company to grow, purely product based is limited, whereas service based is endless. So how do you value the future of a product based company when you support that the most than service oriented?
Service oriented is sure to make enough profit (if the company is ready to face the after math to as much as 90% decline is faced), where as the product based is highly competitive and always have a limit.
Comment by SAF — February 9, 2009 @ 12:41 pm
good post. the outsourcing business will continue as long as the salary of employees is not greater than 30-33% of the income. The SWITCH has set a trend where they outsourced the low end (lesser quality) work to India(one of these companies does a text to pdf conversion work for 5 crore, keep in mind there are text-pdf converter softwares are avaialble ). In fact they should follow Accenture/IBM where the quality of work is much better. The great part is to compete with the SWITCH even these global players set up business in India. Its not only product business, but consulting too adds value. Also, regarding death of the Indian outsourcing, It will not happen in near future, As even today India is handling only 55 Billion of the global IT Industry(800 Bn Industry) which is less than 10%.
Hope this recession will lead to the outsourcing of the quality work
Thanks
shihab
Comment by shihab — February 9, 2009 @ 4:21 pm
@Kenney and Shoban,
U r absolutely right. People do not dare think beyond conservative limits.
@Dhanesh,
It is very easy to consider all activities as business. You run a respected business when you do not go to the extent of doing everything your clients want just for the sake of business. Exactly an year back, we received an email from the management saying that our access to public mail sites would now be blocked owing to ‘customer concerns’. Was that move necessary? Why would you do anything to please your clients at the expense of satisfaction of your employees?
Secondly, IBM is a veteran in the industry. They’ve come a long way. They still have software products (I think they still have their server business as well not really sure though corect me if I’m wrong). So EVEN if they end making little off their outsorcing arm, they have alternates. Does Infy, Wipro or TCS have that? Besides, IBM’s reach and access to funds is undeniably stronger.
Pal, few of our senior managers are from IITs and IISc and quite honestly few of them act like retards
Comment by The Nomad — February 9, 2009 @ 10:03 pm
@SAF,
You could have a point when you say that. But consider Google or Microsoft. They have both, products and services. I think they’re aiming for the SaaS space.
I’m not fully convinced when you say that service oriented companies always have the upper hand. Products always command a greater price and tend to have loyal customers. A service oriented company may have to try hard to get business and expand, extract the same amount of loyality as expected from a customer of a product. Indian IT companies can only plug a hole where there’s one. They can never do anything original and make money out of it.
The whole bone of contention here is originality and innovation which our firms DO NOT posses or atleast they’re stifled in favour of client commitments. How Shallow!
Comment by The Nomad — February 9, 2009 @ 10:22 pm
I never said Indian IT outsourcing is gonna die. I just said that it could as well be unwise on our part to go on rallying behind it when we have much better options to consider and explore.When you’ve got the brains, why not make use of it? Accenture/IBM may do better and engaging work, but our own home grown ones are still attracted to low level application maintainence, production support (much like a 24hr call centre job without all its benefits) and minor enhancements. Not a single one takes to RnD. Boeing may have outsourced a part of their drafting work to Indian IT guys but unless they one day outsource their wing or fuselage designing itslef, I don’t think we have any reason to dream big.
As far as the numbers go, right now we’re capable of taking up only the low level work.
Comment by The Nomad — February 9, 2009 @ 10:33 pm
Quote “IT companies will only survive if they convert from a purely services oriented biz to product biz, which at the moment doesn’t seem to be happening.”
When asked by few trainess, why Infosys is not developing more products, the great NRN replied “I must admit that we do not have the right project managing capabilities for that kinda foray into products.”
Everyone is talking about a switch from pure-service to products, but nobody seemed to be doing it!
(Sasken,Subex are some companies which are product based, but I think these companies made losses in recent quarters)
Comment by Cijo Thomas — June 21, 2009 @ 9:41 am