With global competition heating up, New York Times columnist Tom Friedman, former Indian Union IT Minister Arun Shourie and IIT 2005 convention chairman Sudhakar Shenoy believe that India needs to shift course in order to maintain its lead.
Though it has been portrayed as the poster child of outsourcing by promoters and critics alike in the debate over the new global economy, India is now being viewed by some economic pundits as a "short-term phenomenon."
As the wages of IT workers in India have grown at a rate of 20 percent per annum, several American corporations are now looking northward than eastward when it comes to farming out jobs, since doing business in India is only slightly cheaper than in Canada.
Similarly, Mauritius and Dubai are aggressively promoting themselves as competitive players in the IT market. If India is losing traction, as the economists claim, India-West asked these three individuals, during the 2nd annual IIT convention here (I-W, May 27), what the country can do to stay in the game, or is it faced with troubled times ahead?
"If it were just about wage arbitrage, then Haiti would be the leader in outsourcing," Friedman pointed out. "If it were about (marketing) English and wages, then Egypt would be the capital of outsourcing for Europe."
The Indian branches of American companies that invested early on in the process, such as Texas Instruments and General Electric, "have already patented 1,000 products in the United States on the last 15 years," he noted. "So we're talking about something that is way beyond wage arbitrage."
The calling centers are on their way out in India, Friedman maintained. "They are going to move to Mauritius, they're going to move to Egypt, where they have a call center of 1,000 people now that works for Microsoft. That's a call center that would have gone to Bangalore five years ago; now it's in Cairo. So the low end is going to migrate."
The high end companies in India "will have to move up the value chain," he argued. In this world that's getting just not bigger in terms of the market but more complex, spinning off more and more new products is a good thing. India will be able to take advantage of that."
India will succeed in the global marketplace as long as it continues to emphasize education and keep its infrastructure moving ahead. "So I don't think India is a flash in the pan," Freidman declared. "This is not textiles. This is something much different."
The success of any industry or service is ephemeral, Shourie contended. "For that reason, (India) must always upscale its products. It must move away from call centers, for instance, and move to the next stage. It should move away from data processing and move into software products."
In time, the country should move away from software products into chip design, he asserted. "In each of these things, we must upscale any activity we are doing. It's not just in services, but in manufacturing, in agriculture (that) we have the potential. And I believe we will advance in other sectors, also. What about sending other people's satellites into space? We will be cost competitive in that, also. What about the pharmaceutical industry? With one drug, we catch up. But we should be into 23 other drugs."
Such is the world of tomorrow's global competition, "and in India, we can strive for excellence across a much wider spectrum than just call centers. In India, it is just one activity," Shourie stated.
Given India's economic reforms in the early 1990s, "corporations are now on their own," Shourie noted. "But of course, partnerships are required, infrastructure is required and sometimes scale is required, which government intervention can provide."
Shenoy does not believe India faces any real trouble in the foreseeable future. No company can afford to depend solely on low costs, "and India has to realize that," he told India-West. "And I think it is well on its way to realizing this."
India has to "bring in a lot of efficiencies in terms of manufacturing, in terms of quality, in terms of scaling, etc.," he said. "The only way that India can keep pace with the growth rates and all that is to make sure that there is a lot of efficiency brought in."
Wages will keep rising, "and that's a good thing," he said, "because when wages keep rising, the people have more disposable income. I'm not an economist, but even my common sense tells me that when that happens, there is more buying power in the country. And when there is more buying power, more things are going to be made and it will attract more foreign investment."
Though it has been portrayed as the poster child of outsourcing by promoters and critics alike in the debate over the new global economy, India is now being viewed by some economic pundits as a "short-term phenomenon."
As the wages of IT workers in India have grown at a rate of 20 percent per annum, several American corporations are now looking northward than eastward when it comes to farming out jobs, since doing business in India is only slightly cheaper than in Canada.
Similarly, Mauritius and Dubai are aggressively promoting themselves as competitive players in the IT market. If India is losing traction, as the economists claim, India-West asked these three individuals, during the 2nd annual IIT convention here (I-W, May 27), what the country can do to stay in the game, or is it faced with troubled times ahead?
"If it were just about wage arbitrage, then Haiti would be the leader in outsourcing," Friedman pointed out. "If it were about (marketing) English and wages, then Egypt would be the capital of outsourcing for Europe."
The Indian branches of American companies that invested early on in the process, such as Texas Instruments and General Electric, "have already patented 1,000 products in the United States on the last 15 years," he noted. "So we're talking about something that is way beyond wage arbitrage."
The calling centers are on their way out in India, Friedman maintained. "They are going to move to Mauritius, they're going to move to Egypt, where they have a call center of 1,000 people now that works for Microsoft. That's a call center that would have gone to Bangalore five years ago; now it's in Cairo. So the low end is going to migrate."
The high end companies in India "will have to move up the value chain," he argued. In this world that's getting just not bigger in terms of the market but more complex, spinning off more and more new products is a good thing. India will be able to take advantage of that."
India will succeed in the global marketplace as long as it continues to emphasize education and keep its infrastructure moving ahead. "So I don't think India is a flash in the pan," Freidman declared. "This is not textiles. This is something much different."
The success of any industry or service is ephemeral, Shourie contended. "For that reason, (India) must always upscale its products. It must move away from call centers, for instance, and move to the next stage. It should move away from data processing and move into software products."
In time, the country should move away from software products into chip design, he asserted. "In each of these things, we must upscale any activity we are doing. It's not just in services, but in manufacturing, in agriculture (that) we have the potential. And I believe we will advance in other sectors, also. What about sending other people's satellites into space? We will be cost competitive in that, also. What about the pharmaceutical industry? With one drug, we catch up. But we should be into 23 other drugs."
Such is the world of tomorrow's global competition, "and in India, we can strive for excellence across a much wider spectrum than just call centers. In India, it is just one activity," Shourie stated.
Given India's economic reforms in the early 1990s, "corporations are now on their own," Shourie noted. "But of course, partnerships are required, infrastructure is required and sometimes scale is required, which government intervention can provide."
Shenoy does not believe India faces any real trouble in the foreseeable future. No company can afford to depend solely on low costs, "and India has to realize that," he told India-West. "And I think it is well on its way to realizing this."
India has to "bring in a lot of efficiencies in terms of manufacturing, in terms of quality, in terms of scaling, etc.," he said. "The only way that India can keep pace with the growth rates and all that is to make sure that there is a lot of efficiency brought in."
Wages will keep rising, "and that's a good thing," he said, "because when wages keep rising, the people have more disposable income. I'm not an economist, but even my common sense tells me that when that happens, there is more buying power in the country. And when there is more buying power, more things are going to be made and it will attract more foreign investment."
No comments:
Post a Comment