India is partially aided in the fact that India's equivalent of Wall Street doesn't have anywhere near as a voracious appetite as Wall Street Manhattan, but still ...
So where's the beef???
Posted on 05/20/2010 8:24:56 AM PDT by altair
I am an expat (once again) this time in India. Last year my job was outsourced to India and I decided to follow it. Too few people seem to understand why jobs are being outsourced. It's all about economics.
I work for a major multinational firm that everyone who accesses the internet does business with (whether they want to or not). We originally started in San Jose, CA, but now have offices throughout the world. There is currently a slow, but inexorable drive within the company to get out of California and relocate elsewhere. The two "satellite" centers are located in RTP, North Carolina and Bangalore, India.
The PHBs have come up with a term called "Market Adjacency". All that really means is that the company employs people near where there exists new markets to sell to. Increasingly in the 3rd world, there exists opportunities to both decrease the cost of doing business with respect to salaries, but also opportunities where the companies involved are offered "incentives" to locate there.
This actually makes a lot of sense on more than the raw bottom line figures. How many of you have ever been transferred on a service call to a call center in a different part of the world and experienced difficulty communicating with the person at the other end? That kind of outsourcing is only going to bite you in the long run as customer satisfaction takes a pretty big hit.
I predict that Bangalore, within the coming decade will become the new global "Silicon Valley" even though it's not in a valley. Let's take a look at Bangalore. Climate-wise, it's located away from the coast and experiences arid climate. Although located in the tropics, it is largely immune to passing storms that seem to always miss it. (There's probably a term for that - the place Mrs. Altair is from in Mindanao has exactly the same feature). Once all the facilities get built, it easily has the capability of becoming a popular tourist destination.
The real "secret" as to why businesses are collecting here now lies in Indian law and designated SEZs (Special Economic Zones)
India was one of the first in Asia to recognize the effectiveness of the Export Processing Zone (EPZ) model in promoting exports, with Asia's first EPZ set up in Kandla in 1965. With a view to overcome the shortcomings experienced on account of the multiplicity of controls and clearances; absence of world-class infrastructure, and an unstable fiscal regime and with a view to attract larger foreign investments in India, the Special Economic Zones (SEZs) Policy was announced in April 2000.
Now compare the following to the current US business climate (and I include Bush-Clinton-Bush in this).
This policy intended to make SEZs an engine for economic growth supported by quality infrastructure complemented by an attractive fiscal package, both at the Centre and the State level, with the minimum possible regulations. SEZs in India functioned from 1.11.2000 to 09.02.2006 under the provisions of the Foreign Trade Policy and fiscal incentives were made effective through the provisions of relevant statutes.
To instill confidence in investors and signal the Government's commitment to a stable SEZ policy regime and with a view to impart stability to the SEZ regime thereby generating greater economic activity and employment through the establishment of SEZs, a comprehensive draft SEZ Bill prepared after extensive discussions with the stakeholders. A number of meetings were held in various parts of the country both by the Minister for Commerce and Industry as well as senior officials for this purpose. The Special Economic Zones Act, 2005, was passed by Parliament in May, 2005 which received Presidential assent on the 23rd of June, 2005. The draft SEZ Rules were widely discussed and put on the website of the Department of Commerce offering suggestions/comments. Around 800 suggestions were received on the draft rules. After extensive consultations, the SEZ Act, 2005, supported by SEZ Rules, came into effect on 10th February, 2006, providing for drastic simplification of procedures and for single window clearance on matters relating to central as well as state governments. The main objectives of the SEZ Act are:
(How familiar does the following sound?)
It is expected that this will trigger a large flow of foreign and domestic investment in SEZs, in infrastructure and productive capacity, leading to generation of additional economic activity and creation of employment opportunities.
Executive summary: What part of getting government out business and letting business do what it does best doesn't anyone understand?
Here's another quote from an investment web site.
The Government of India (GOI) has formulated a policy for setting up Special Economic Zones (SEZ) in India. SEZs are proposed to be specially delineated duty free enclaves for the purpose of trade, operations, duty and tariffs. These zones are self-contained and integrated having their own infrastructure and support services.
India didn't suffer at all from the Great Crash of 2008. QED
India is partially aided in the fact that India's equivalent of Wall Street doesn't have anywhere near as a voracious appetite as Wall Street Manhattan, but still ...
Thank you for your post. This is VERY interesting to me, coming from a “man on the scene” with no hidden agenda.
Please tell me what you mean by the three-letter acronym “PHB”?
thx and FRegards
I’ve been in IT since 1983. I work for a major international company as well. I have gotten sick and tired of telephone conferences with people that speak in broken english and finally found a solution. I CONSTANTLY ask them to repeat themselves, over and over and over, until I understand what they are saying.
My company has no clue how this language barrier affects projects. I do. Back in the day, people communicated and projects were usually clean and at least came “close” to what the business wanted. Nowadays, Fix In Prod, which was only a joke back in the 80’s and 90’s, is actually the rule of the day.
The thing is, some people do not understand what is being said and just “rubber stamp” everything they think they are hearing. It then comes back to bite us in the end.
It is one reason I’m desperate to get out of the business. I’m just done.
>> Have you ever read Dilbert?
Yeah, and I see it not only as good humor but as a literal manual to the inner workings of Ameritech.
Per my freepmail to you, I actually figured it out for myself after I thought about it a little.
When I worked in the Valley, my own employees used to call me that. Jokingly (...I think.) ;-)
Morgan Spurlock did an episode about a guy who followed his job to India. The most interesting part was the attitude of the Indians. They understand the anger Americans have over the issue but also know that the jobs won’t stay there forever.
We've simply succeeded in training our competition how to beat us and they don't need us anymore. They have the manufacturing AND know-how to build, improve and sell what used to be ours.
SEZ WHO? LOL
India is partially aided in the fact that India's equivalent of Wall Street doesn't have anywhere near as a voracious appetite as Wall Street Manhattan, but still ...
So where's the beef???
One important consideration here is that many high-tech jobs are -- by definition -- shaky at best, for the reasons cited here. In any high-tech service industry it's very easy to get an office operation up and running halfway around the world -- especially in comparison to a manufacturing company where the cost of building a new plant is enormous. This means that the jobs will likely flow to any country where a well-educated work force (especially a "docile" one like India's) can do things for a fraction of what it would cost here in the U.S.
Just be polite about it. I have the "advantage" that Mrs. Altair doesn't speak too much more than broken English and I can't speak very much of her language, so I'm very used to it.
What I find sad is that it was a lot easier being Mr. XEmacs in the 1990s and dealing with non-native-English speakers solely through email, than now via phone calls or in-person meetings and being paid for it.
In Japan it was a ton easier (e-)written, because I could at least cut & paste through an online dictionary to get words I didn't understand.
Another excellent point on this thread. There is a big difference between labor-intensive services and innovation. This is why, for example, big pharmaceutical firms still do most of their R&D here in the U.S. even as they move more of their manufacturing elsewhere.
Muwahahahaha. See that all the time. The first time I was startled. Same as the time the driver had to stop for a herd of goats crossing a city street.
Totally agree.
Without innovation, there may be jobs but the accretive value will be marginalized once cheaper zones are found, like CPAC.
“What part of “Get Government out of the way and let businesses do what they do best - employ people and create value” does anyone not understand?”
Our elected officials don’t have the capability to understand the difference between constructive regulation and destructive regulation. While our government is killing jobs, and driving business offshore, they allow BP to do what they did.
What do you think they're doing? They're just doing it in India rather than here.
What or who is Morgan Spurlock, or is that something I'm expected to know?
I don't have any particular anger about the location. India has much more sensible immigration laws than the US and I got Mrs. Altair here within a few days rather than having to deal with lawyers, thousands of dollars of lawyers fees and the rest of that Obama.
I guess I need to post something too about Indian Immigration laws. They're draconian compared to Japan. I supposed I'm going to have to give up the fight to keep an unadorned "immigration" as well as I had to give up on the term "hacker". When I say "immigration", I mean "legal immigration" and when I say "hacker", I mean uber programmer. Sigh.
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