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 As
2003 draws to a close, technologists around the globe feel more
confident of the year ahead than the year past. In the time-honoured
tradition of columnists, MOHAN BABU takes stock of “the year
that was.” If the stock-markets were any indication of the
general mood, things are upbeat as we approach the close of 2003
The year started off with a bad hangover of layoffs
and protracted downturn from 2002. Also, as we began the year, the
war in Iraq was looming large over the horizon of the global landscape.
Alongside came the SARS scare bringing global air-travel to a crawl.
These two geo-political factors contributed to a situation where
there was almost a freeze of new business activity, including technology
projects, upgrades, etc. From an Indian standpoint, outsourcing—which
is highly dependent on cross-border communication and travel—was
also badly affected, at least during the first quarter of the year.
Client visits were postponed, project related travel halted—all
leading to a huge lull in the activities.
As the year progressed, the situation started
looking more optimistic and a number of things happened (not necessarily
chronicled in order of occurrence):
- The initial fears of a large-scale Gulf War gave way to some
moderation after American assault on Iraq lead to a swift siege
of Baghdad after just a couple of months (this is no small achievement,
even though sporadic violence continues in Iraq to this day).
The Chinese government, under glaring international scrutiny,
toughened its stance on SARS. Alongside, the other governments
of Asia, travel and airline companies rallied around to ensure
that the deadly four-letter word, S-A-R-S, was out of sight and
mind.
- Towards the second half of the year, the American economy started
looking upbeat. Although economists still gave a cautionary stance
to the signs of ‘jobless recovery,’ things were definitely
beginning to look more stable, if not utterly positive. Labour
indexes, consumer confidence figures, and the ultimate index of
all—the American stock-market—began to look upwards.
- Reality check on outsourcing: Indian outsourcers continued to
make strides in the West. Most large Western companies have started
to factor benefits of outsourcing into their global strategies.
Consultants and IT forecasters took differing views ranging from
“outsourcing is a win-win proposition” to a more alarmist
“outsourcing can lead to job cuts in the West.” All
this rhetoric, however, did not deter Indian companies that have
been growing and executing global projects without too much ado.
There were a few trends in the global arena which
focused on India as an emerging force, a couple of them include:
- Goldman Sachs sponsored whitepaper “Dreaming with BRICs:
the path to 2050,” made rounds among the intelligentsia during
the last quarter of the year. The article talked highly of the
potential of the BRIC group of countries—Brazil, Russia,
India and China—during the coming few decades, and how together
they could overtake the current G8 Western nations.
- The McKinsey Quarterly published an interesting article on
outsourcing, the gist of which is as follows: “Companies
that send their back-office jobs offshore often cut their labour
costs by as much as half. But new research by the McKinsey Global
Institute finds that these companies risk leaving billions of
dollars in savings behind if they merely replicate what they do
at home in countries where labour is cheap. The savviest operators
redesign business processes to exploit automation and take full
advantage of the new environment’s potential.”
The trend towards value added outsourcing is perhaps
the key to growth and leveraging of India’s outsourcing strengths.
For instance, a recent Forbes article talked about American Express
which hired programmers in India to write software to reconcile
accounts, and the software now reconciles more than half a million
accounts every day. The company, which paid the equivalent of only
$5,000 to develop this solution, estimates that licensing more sophisticated
database software would have cost several million dollars.
Now, this is the kind of cost effective outsourcing
that is bound to become a win-win proposition, not just for global
clients, but to India Inc.
Mohan Babu is a US based software consultant
trying to find the ‘sweet spot’ where IT meets business.
E-mail: mohan@garamchai.com
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