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India’s outsourcing business = nirvana for Indian workers?

February 18, 2007

Last year I went to India and have blogged extensively about my thoughts since. If you were to believe the news over the last couple of years, everyone in India was (or wanted to be) a programmer working for Tata or Infosys. Om Malik has noted in his own blog that India’s best and brightest see the outsourcing giants as "code factories." Turns out, most graduates of IIT Powai won’t even interview with the outsourcers, in 2006 only 10 of the 574 IIT Powai graduates went to work for tech outsourcers. Instead, most are joining companies like Google and Yahoo. Even Tata executives realize that the future is gloomy for their business.

Nothing is as simple as the people who write books and business articles would lead you to believe. I am very bullish on India, Philippines and China ~ but perhaps not for the same reasons. I suggest that entrepreneurs or recent MBA grads head to India and take a look for themselves. Why? As I suggested last year:

My advice? Go to India and witness how entrepreneurs with 10% of the resources available to Americans can create viable businesses. These guys have to deal with daily electrical outages, old computers, faulty wiring, substandard building codes, no air conditioning; these guys don’t have 90% of what we have, but somehow they are able to start businesses. Climb back into your business class seat, drive to your comfortable home in the suburbs and tell me you need more money for a laptop or a phone system. I bet you will realize that you don’t need as much as you thought. The ironic truth is that with less, your result will undoubtedly be better. Or maybe I am wrong…

Written by Alexander Muse · Filed Under Blog ·

Comments »

It is very heard to separate the “wants” from the “needs”. I think sometimes it is even harder to determine which has a higher ROI.

Comment by Blake P. — February 18, 2007 @ 9:23 pm

This is also true in the Philippines. What is keeping us from getting out is the limited service of Paypal e.g. we can only use Paypal when buying online but we can’t receive funds thru it but the Paypal folks are slowly considering to give its full service in our country, so that would be just a matter of time.

Comment by Frederic Tubale — February 18, 2007 @ 9:31 pm

Sorry, what I mean by “this is also true in the Philippines” is that we can also put up a business with only 10% of the resources that are available.

Comment by Frederic Tubale — February 18, 2007 @ 9:33 pm

Hi !!! I didn’t get what you are trying to say in the post. Are you saying that there is no future of outsourcing in India anymore as graduates from IIT Powai don’t sit for interviews with outsources? OR outsourcing business will boom?

I started a small outsourced projects development business in early 2005 but it got burst after 9 months of operation because it’s really hard to find developers who code in open source .. if you make a visit to Tata, Infosys, Wipro and others you’ll find that these giants work on Microsoft, IBM based product lines .. not open source products. Most of the developers working in these companies don’t even know what PHP is .. RubyonRails (such a hype) but if you catch someone from infosys and ask them what it is .. ummm .. “No idea”.

The basic job culture in India is just to get a job after graduation and work for some big company. Entrepreneurship doesn’t exist in IT here (I don’t deny that only people who can’t get a damn good job in IT giants OR are totally focused on their own ideas and stuff .. they start their own small business). My parents have been always bullying me to get a job .. I am 27+ and successfully provide independent consulting (one man show and earning good living) but still in my parents eyes I am not settled because I don’t work for some big IT giant.

Even if you see Silicon Valley in CA you’ll see thousands of technopreneur there (small to big) .. in India you see only big .. and these big ones have their backbone in Silicon Valley, CA. Only giants such as Infosys, Tata, Wipro others have their own standing.

Anyways, let’s come back to topic .. a lot of businesses fail in India because of

1. Power cuts (don’t even know how long electricty will be off for)
2. Lack of good locations to setup a business (the one that exist are either too expensive to rent a space OR rent a space in local market which is always noisy and doesn’t even give a feel that you work something different than the local grocers).
3. Lack of people resources (small company can’t afford to pay like giants .. thus parents don’t allow their kids to work for smaller companies).
4. There is a stupid mentality that smaller companies working on open source products are just bunch of idiots trying to run them. Even today morning I had a talk with my dad .. and he was just pushing on one point that smaller companies never tend to exist in the market.

I hope you’ll enjoy reading the real insight on outsourcing market in India.

Comment by Chetan Mittal — February 19, 2007 @ 2:20 am

Interesting website you have on India. Coming from a US citizen, it came across as quite surprising (unless of course you are from a Multinational looking to outsource to cut costs!).

Comment by Hemant Velury — February 19, 2007 @ 10:04 am

Code factories don’t need IITians. With thousands of engineering colleges producing lakhs of engineers every year, there will surely be no dearth of “code factory workers” in short to medium term. Beyond that time frame we can expect other “low cost coder” countries (China etc.) to scale up. Thus, my answer to the question “India’s outsourcing business=nirvana for indian workers?” is yes.

Comment by Sudesh Bainsla — February 20, 2007 @ 5:01 am

“Go to India and witness how entrepreneurs with 10% of the resources available to Americans can create viable businesses.”

This is the reason why we continue to lose jobs to globalization. Americans seem to think they are entitled to a certain lifestyle regardless of their skills, education, or motivation. At the same time they bitch when their $40 per hour UAW job gets outsourced to another country. There is always someone that will do it cheaper. We want cheap (inexpensive) products but don’t like the ramifications of it.

Comment by Jason McMinn — February 20, 2007 @ 10:55 am

[...] Alexander Muse writes, upon returning from India: “Go to India and witness how entrepreneurs with 10% of the resources available to Americans can create viable businesses.” [...]