Posted on 01/03/2005 12:03:06 PM PST by jb6
Many in India especially in Southern India (Bangalore, Hyderabad) are dancing right now with unbelievable amount of outsourcing contracts from America and Europe. While people are having difficulty in finding new jobs, BPO and IT companies in India are having a bonanza.
What is the future of this industry? When I asked this question to ten different largest IT and Call Center operators, their CEOs avoided the question and went on saying – the American companies never used to talk to us, today they are eager to keep us busy. It is a bonanza of money and contracts for the Indian companies.
The recent model is obvious. The basic innovation and implementation will be in America, Europe and Japan. The commercial manufacturing will take place primarily in China but also in Eastern Europe, India and some other countries. The back office and customer support will be handed over to India.
No matter what the International business model is, what really is the future of outsourcing?
India is a popular destination for outsourcing contracts because it has a tremendous number of cheap qualified educated English-speaking intelligent work forces. The Western companies have started using this talent pool to make sure they can reduce the cost of their goods and services in a deflation dominated world where lack of pricing power makes it difficult to expand and stay in business.
However, the work that is outsourced to India are those that can be replaced by automated programs, are repetitive in nature and less strategic for the Businesses.
Given this backdrop, if after three years of semi-satisfactory upswing in Business cycle, the world faces another economic downturn; it can be killer for the outsourcing world.
India has recently expanded relentlessly to accommodate the outsourcing mania of Western Corporations to cut cost by any means. This relentless cost cutting has provided extra cash to boost the tax-free dividends in America. But it also has created a fundamentally productivity driven weaker economy where the new style is not to hire, and if needed get the work done from India for pennies on the dollar.
The net outcome can be horrific. For example, the lack of high paying jobs in USA has forced car companies to provide excessive incentives to sell cars. Now those incentives have stopped working also. The debt level is so high and savings rate so low in America that a mild downturn can propagate into major recession.
In that case the deflation will show its teeth again. The Western companies will be forced to cut cost further and lower the price. This time tough they will look for eliminating outsourcing from India with Web based and other productivity enhanced automation to save even the pennies on the dollar.
That will be the killer economic Tsunami wave for India. China will be less effected as it will still be the hub for cheap manufacturing. China will get effected though when cheap Chinese semi-skilled labor is replaced with intelligent and even more disciplined Robots.
The killer economic Tsunami will cause a sever effect on Indian private sector.
The scenario may work out in 2005 or it may happen any time within next five years.
Just had an online interview with one, and damn his english was hard to understand but not that bad. Now we had an import for a tester who wrote JUST LIKE he spoke, which meant hours of wasted effort figuring out what the hell he was talking about.
I have more then once flat out told them I could not understand a word they say. The I ask to speak to some I can understand.
GE, an early adoptor of the offshore-to-India business model, has just completed the sale of their ground breaking India based contracting operations. Wonder what they see that the rest of the pack don't.
You are correct. I refuse wherever possible, to deal with someone who can't pronounce English well enough to be understood. The Indians do have a good vocabulary, but I have trouble understanding them. I've all but given up on Dell computers because of this.
That has been my observation about cars for some time.
In fact, a favorite point of mine is to point out that adjusted for inflation, the different categories of cars (economy coupe, sport coupe, midsize sedan, etc) cost as much today as they did in 1965. Multiplied times 6, a Volkswagen Beetle cost what a Kia does now. A Cadillac El Dorado cost what a Lexus does now. Yet an auto loan was three years then while it is six years today.
Let us sketch two possibilities.
1. Bush's policies on immigration fatally divide the GOP along class lines. His diversion of political capital that the cultural right was expecting him to spend on them will leave them alienated and embittered in 2008.
2. The Dems (and there are strong indications that their base sees this) recognize that economic populism is the only weapon they have against "moral values". After all, the Christian Right was all New Deal Democrats two generations ago. And to be a Christian is to believe that there is a higher principle than maximizing shareholder equity at the expense of workers.
3. By being an immigration hawk, Hillary can pick up Arizona and/or Colorado and assuming that she gets all the states Kerry did, she's in.
I think Hillary is smart enough to realize that NAFTA was politically a blunder.
The New Democrats did not give a damn about their blue collar electoral base. After all, they could all go to community college and learn Visual Basic and HTML, couldn't they ? NAFTA, the legislative centerpiece of the first Clinton term, was a betrayal of Joe Sixpack. Joe Sixpack responded by rejecting a Democratic Party that cared more about gay marriage and abortion than it did about him. So their "victory" cost them the House, the Senate, mayoralties and governorships.
Kerry's stabs at economic populism were befitting a man who has seven mansions and lives off his wife's money.
Hillary is smarter. Without economic populism the Democratic Party has nothing.
Good post I agree. When it comes to certain issues the Dems and Repubs are both for sale.
Good political calculation. But remember when Hillary was pretending to be an evangelical, and how hollow it sounded? I wonder if she can hide her scorn for Joe Six Pack.
You are absolutely right. I am already there with being out of the IT sector for 2 years now and trying my trade in selling for a start up IT firm run by a couple of 20 somethings who couldn't find their asses in broad daylight.
My wife and I just did a home equity loan 2 weeks ago to payoff the high interest credit cards. I have 2 in college with her going for her doctorage. We are becoming a bunch of educated idiots. 2005 will be the end of my marriage and my financial future. The only avenue left will be driving a truck over the road and bankruptcy.
The hardest part is no one is listening. No one in my church who I have tithed to smithereens, my parents who are millionaires and won't spare a dime, and my kids who have been living off a meal ticket. In the next 6 months, it is going to come to a crashing end and all I will have is a dog with me behind the wheel of a Kenworth or Peterbuilt.
The funny part about all of this is our Government is responsible by allowing the H1 B's to come in and take our jobs away and then allow them to be shipped overseas.
The funny part is that this will be the downfall of our Government and all of the programs. NO BUCKS - NO BUCK RODGERS.
I love that poster! Thanks!
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