Outsourcing India

The topic might be common, but it’s a kind of irritation coming out of me after working for 3 different companies in india (each one year). 3 years might be a small time to comment on such a topic, may be I do not even carry enough knowledge for this, but my intension is to gain knowledge from the experts who come across this blog.

My journey to professional career started with Reliance Communication Ltd. While working for this company I used to feel proud of myself thinking that I was working with one of the biggest Indian company that has made quite a significant contribution in Indian cellular telephony market. When I changed to Flextronics, that feeling went off, as I was not working for an Indian company itself. After coming to Wipro, here it’s a kind of mixed feeling. Though I am working for one of the biggest IT companies, MNC in fact, which is based on India, I am not contributing anything to India. I am in fact working for a foreign company. Those companies get benefits out of my work, not the Indian society.

India today has become one of the top countries involved in outsourcing business. Be it a software industry or a BPO industry. The companies like Wipro, Infosys, TCS etc. have played a major role here. Any top foreign product company you can think of, has outsourced something to one of the IT companies in India. These companies have got the best experts in all the domain, whether it is finance, banking, telecom, electronics and semiconductors, health and insurance and what not. But in this race of outsourcing, people have not realized that nobody is now considering India’s capabilities of producing. Agreed, that IT companies today have played the major role to provide employment to most of Indian people, but apart from that, there is no contribution towards Indian productivity. For example, think of any electronics items, be it laptop, music players, cameras, mobile phones, etc, people can’t think of any Indian company producing these items. India still is dependent on foreign electronics market for these equipments. Why not any Indian company can become one of the top vendors for mobile phones, routers, switches, cameras, or one of the top contributor to even IP telephony or telecom hardware solutions, or any other domain solutions ?? (I do not have enough expertise to comment on other domains). After all it is not the case that we haven’t got any expertise. Indian engineers have been developing and testing the firmwares for all these things, why not build the whole product then? Till what time will we keep on working for the benefit of foreign companies (while working ‘in an Indian company’!!)?? When will we start working in Indian company who produce for India?

Things above are easy to think, but hard to implement. Still someday I would love to work for such company who works for India 🙂

(As already said, I might not have complete information here, please provide your inputs where you think I have gone wrong!)


Posted on November 9, 2007, in General and tagged , , , . Bookmark the permalink. 8 Comments.

  1. hey sejal, just wanted to add something to wat u have raised up here. Most citizens (no matter what country they belong to) may cringe at the thought of out-sourcing since it drains employment as well as resources out of their country. So, we should be proud that India is a leading IT solutions provider. Having said that, I believe most MNC companies have also been wanting to open up manufacturing facilities in india for a very long time but govt policies on foreign investment has been delaying India’s progress in the field of electronics research as well as fabrication (note that I m talking abt just electronics ie Chips, ICs, Transistors…) Moreover, Indian companies do indulge in such applications but at a much smaller scale due to lack of funding, expertise or/and potential customers since China is the biggest supplier of cheap but not so reliable electronics.
    Recently, Indian govt has green signalled the first fabrication facility to open up in Kolkata and thereby, many more MNC like Intel, IBM, Atmel are looking forward to having their our facility in india since China has not been eager to improve on quality. Well, again most of these are foreign countries but dont forget they have to pay a lot of taxes to the indian govt for the services they will get. This will help increase employment and reduce brain drain at the same time …

    Let me know if you would like to know more.

  2. Interesting topic. I find pommy’s comments very logical. I was just going through some articles on the web recently wherein I read how removing outsourcing has been a prime voting agenda among the potential Bush successors in the US.

    The main points I saw up here were more job opportunities and taxes being paid to the Indian Govt. What I would like to know is regarding the ownership of products and inventions.

    Say, I invent something novel sitting in an NY based MNC sitting in B’lore. I wanna patent that invention. My employer (NC based MNC) will enjoy the royalty out of that (I will get some shabby amount) The que is: Will any share/advantage of that royalty/invention go to the US govt.? If yes, you are obviously participating in what is termed as “brain drain”. Am I missing something?

  3. Sejal Parikh

    No you are not missing anything as such pulkit.. in fact that’s wht my point is.. Pommy, you r right, India is still progressing in terms of fabrication facilities, but if at all we get our own fabrication plant, it’ll not possibly be used by any Indian company. And that’ll in turn b outsourcing of labour. We have intelligece, but that’s not used for creativity or productivity, but its just used as labour, which is governed by foreign companies. There is a big difference between ‘Activity’ and ‘Productivity’ and indian engineers are only ‘Active’ towards foreign companies, but they are not ‘Productive’ or ‘creative’ as such.

    Though foreign companies pay some taxes to indian government for the facilities they use, but those taxes are surely not as high as their profit. In fact they use indian labour only because it’s more economical to them. India might be a leading IT solutions provider, but indirectly it’s only a provider of cheap labour.

    Now a days almost all product companies have got their outlets in india, so there is now less interest for outsourcing to IT companies of India. Believe me, I have seen many projects getting scrapped only due to this reason.

    Imagine after few years when there will be high inflation in value of Indian Rupee (in fact it has started now only, its 40 Rs for 1 USD right now instead of 46 Rs sometimes back), there can be a breakeven point when it will not be much economical for foriegn companies to outsource much of it’s processes to india. And at that time I wonder what is goin to happen to all bunch of IT engineers like us without India’s own product company.

  4. If and when there comes that break even point, Sejal, you would no longer have to worry about India’s economic condition 🙂 And once India has climbed up the ladder that far, we would probly have enough funds get into large scale manufacturing and RnD. So, hopefully you and I wouldn’t need to chuck IT either. 🙂

  5. Well in that case I guess I missed that point in my last para 🙂

  6. Ooffff! such a big topic. How about writing book on this and distributing to our indian company founders and upcoming MBA graduates and also a copy at Managment institute libraries. The title should be “INR=USD-Aiming for Currency Equality”.

  7. Well, is it not a simple equation of demand and supply?

    1 USD = 40 INR – somebody is buying and somebody is selling – its all a matter of demand and supply..

    outsourcing…now thats just a business model…chosen by many companies..in India..if it takes you to profitability why not.

    product companies do exist in India – Iflex – by harish/ deepak n co is one of the leading banking products and is a market leader in asia pac / mid east, like wise you should see many more product companies springing up in India in this decade and some more to come (refer to stats with TiE)

    Just to introduce myself – i am sejal’s ex-colleague at Wipro Tech, Pune. 🙂

    Interesting topic sejal, i just have a different perspective.

  8. Hi all,
    Nice blog and comments too, just had a little bit to add to the discussion. Here in India most of the so called IT revolution is getting happened only in the software part of the overall product. so considering that most of the software we write here are being used on the actual product(hardware) which is manufactured else were. Simple example i experienced myself was when i was working on the 3G mobiles our team in one of the leading mobile equipment company developed the next gen interfaces and applications, But these can be released only in the Us and European markets where the spectrum and the costumers are available. Hence any entrepreneur having an idea of starting the electronics manufacturing firm will either think twice else will move the the place he gets the market to sell them. One good thing is even though most these works were done else where, indians contribution is on high note. We can only hope as the days goes by things will get better.

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