Reply to – “Why India outsourcing is doomed?”

I recently came to hear about a blog posting via twitter titled “Why India outsourcing is doomed?”. I felt obliged to clear some points in this blog which is a little thin on facts, and voices age old clichés about outsourcing in India.

Resource Availability and Resource Quality

The author complains that it takes a long time for an employee to join once he/she is offered a job.

  • If a team losses a member half way through a project, it puts the service provider in serious delivery problems, and facing contractual penalties. Unlike organisations that are not in the service-provisioning sector, a failed project impacts a service providers finances far more seriously. There is an added risk to reputation and repeat business. It is precisely for these reasons that notice period was extended. But, service providers are also happy to let developers go (in some cases with a weeks notice) if they are not on any active projects, and without buying back their contract. The service provider saves money and keeps the good will of the developer. This idea of buying back the contract is practiced by small companies located in dark alleys, if you are doing business with them, I am sorry, but you disserve all that you get.
  • India is a vast country with a few sparsely distributed cities. The disparity in the cost of living between these cities and others areas is so vast it is at times hard to believe you are in a developing country. Recently there were news articles about how the likes of Google are taking residential accommodation out of the financial reach for non-IT people. Well, this is nothing compared to what is happening in major IT cities like Bengaluru in India.
  • Employee turnover is the proportion of staff that leaves over a period as a percentage of the total workforce. It has nothing to do with people being moved from project to project. Managing people on projects is an operational practice to ensure contractual obligations are met. If a client wishes to have people on his project not to be moved to other projects, then he should ask for named resources, and this should be done contractually. He should also be prepared to pay accordingly, since it impacts the operational viability of the service provider. By the way, 8-10% is for a few very efficient service providers, other wise as an industry it seems on the low side.
  • I am sick and tired of people complaining of resource quality, and yet refusing to be involved in the selection process. If you want to hire the best become part of the process to ensure you get the best. Setup your own questionnaire and games and what not, but please do not blame the service provider. In all but a few cases the client asks for a number of bodies, and that is what he gets. If you want anything more then act like a long-term partner and not a short-term exploiter of cheap resources. Quality costs, pay for it.

Communication

I have heard many things blamed on development and delivery, but rarely the time zone. The failure is not the time zone difference, the failure is how agile methods are applied and executed. What is provided, under the guise of agile, is simply a work order. Agile requires more involvement from the client side, which translates to cost. Hence the reasons for playing only lip service to the term, agile. As someone mentioned, agile is just an echo in an empty room.

Yes, there are exceptions, but when you make general accusations then the response is also of the same general nature.

Mindset and work ethics

“Employees in India are very difficult to motivate”.

  • The statement goes on to say, “… weeks and months go by with very little progress being made”. This is the proof of the pudding that agile is only for lip service. How did you miss the fact that your developer is falling behind, when you have daily stand-up meetings? Oh, there is that echo again.

“Many developers seem content with what would be considered stagnant projects. … They don’t have a clue about the big goal. … It’s hard to be motivated when you don’t understand why you are doing something.”

  • I have no idea what a stagnant project is, but if a client wishes to pay for a stagnant project, to re-phrase Captain Picard, let it be so.
  • They do have a clue about the big goal, which is to be employed, develop a career, and raise and support their family. Oh, I get it; you mean they don’t share your goal for the project/product. OK, but that is not their problem, it is yours for not being able to create the glue, the passion, in them to buy your goal. To be honest, I have come across very few clients who bother to spend time to do so, similar to their abrogation of duty in the hiring process.
  • Here is a novel idea, tell them about your goal, your big idea, and your passion for why you are doing it. Maybe, they will buy into it, and work for the project/product with the same intensity. You may not sell it to all, but you may find some who will buy it, and there is your team. And, do remember to keep the fires of passion burning; your teams just get a salary for building you passionate dream.

“I recently had a Indian contractor whose task was to perform a certain test several times a day.”

  • This goes back to explaining the “why” of “what” you wanted done. You did not, so she took your words literally and did what you asked her to do.
  • You did not explain the goal of the test, simple. Like Newtons law of equal and opposite forces, you get the same value as your spend dictates.

“Indian people will not question their boss. As a customer you are their boss.”

  • It is part of the Indian culture, the guru-shishya (teacher-student or boss-employee for that matter) tradition of teaching and learning. You don’t question your teacher because you expect him to know more, and that he will explain when it is needed. And, the shishya does question the teacher, but only when he has grasped enough to be able to hold his own position.
  • Understand the culture of the place (try and rid your ethnocentric behavior), and use it to get your job done, there really are no impediments, imaginary or otherwise.

Cost

The rate is always composed of the salary component of the developer, the profit margin, and the overhead expenses. This can be spelled out or it can be provided as a single rate. Next time ask for the details. If you don’t understand the game, then you are in the wrong game.

“When you add productivity loss and overhead costs of running offshore in India you may actually be spending more than you were before.”

  • If you have all those problems then you did not manage your project, you handed over your baby to the nearest cheap nanny services, and you got what you deserved.
  • Don’t drive your car with your eyes shut, or accidents are certain. Whether it is India, Ukraine, Poland, China, or anywhere in the world.

Conclusion

Indian outsourcing is not doomed; it is changing, like all mature business models, economic and business conditions force a re-think of the status quo. As in any other business, organisations that have a tendency to accept change will seek new models (innovate) and survive. Those that are resistant to change and continue the war with marginal rates will fail. The service industry has slowly but surely nurtured a culture of product innovation; if anything this is the transformation of the industry over the long-term, from service innovation to product innovation. The transformation may not be as fast as some would want, but as Confucius said, “It does not matter how slowly you go as long as you do not stop.”

About KM Mukku

Kick-start, build and manage teams in product development (particularly in the financial domain), and enjoy all in adaptive case management, business process design and business process improvement. Currently holding the position of CTO at coMakeIT.
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