US speeding towards banning outsourcing from India – it may be the best thing that happened to India in the last fifty years
Time is running out for Indian and Chinese companies in exploiting currency differentials between Dollar or Euro and Rupees/Yuan. Indian IT sector is inefficient. All that it has done is to provide bodies (programmers) at a lower cost because of currency differences. Days are getting over for inefficient entrepreneurs from India in making easy money exploiting the low conversion rate of Indian Rupees and exploitation of naïve Indian educated youth. It is good that the US senate has recently passed the ban on subcontracting that are based on foreign outsourcing to countries whose currencies are lower compared to dollar or euro. Fact of the matter is, Indian IT companies are inefficient and directionless. While Indian educated youth are probably the best technocrats in the world, the management of Indian IT sector and entrepreneurs are equally worthless. They could not make a single software product that is known for quality and innovation while India has the largest number of software professionals. We can predict at this time that in the next twelve months, especially with US presidential election looming this year, India will be totally banned from all IT and call-center outsourcing.
Is this good or bad for India? In the very short term it may be negative. In the long term however, this is the best thing that can happen to Indian technology sector. While most of India’s achievements in technology have come the Government run public enterprises, the performance of the private sector is equally dismal.
The private sector knows only cheap trading. They treat technology the same as spices. Profit from technology involves innovation and smart marketing – not trading naive bodies (educated youth from India). This will make the National Association of Software and Services Companies (NASSCOM of India) realize what they are doing. This organization has no clue about how technology companies are run in free countries. India should focus on trying to make innovate software and other technology products that other countries cannot. Then provide innovative marketing skills to sell the same in India as well as abroad at a proper price. Dumping these products in US, Europe or Japan will not work. If India fails to do this, she should refrain from growing in the sector of IT and related technologies. Look at how Japanese make money in US or Europe or even in India. Japan has the largest population density (population per square mile) in the world. However it does not try to send Japanese citizens abroad to snatch away jobs in US or Europe. They create innovative products and market the same all over the world. Their products are better in functionalities, quality and sometimes slightly lower in price. How would Mr. Vajpayee react if Japanese companies were exporting people from Japan to India or take Indian domestic jobs away through outsourcing? That would cause a total public outcry and the Indian Government will fall overnight. Is it fair for Mr. Vajpaee to publicly say, “If people cannot go to jobs, jobs will go to them”? No. It was a political stupidity and shows the lack of international awareness of Indian politicians.
Indian Government should encourage Indian private sector to wake up, make competitive products and compete with the rest of the world based on merit and business astute – not just some currency rate differentials that will one way or the other disappear any way. Why is it that Japan and Korea can make world-class products like autos, electronics etc. and market the same in US while India is no where in the horizon? Please realize in three more years India will celebrate sixtieth anniversary of independence. Indian technocrats are creating miracles under American, Canadian, Japanese and European management or entrepreneurship. Why can they not create the same under Indian management or entrepreneurship? It is because Indian private sector is inefficient and is led by incapable people who should really trade spice and precious metals and not software or high tech products.
An Indian software professional makes around Rs.30,000 per month ($650 or 525 euros). When the same person is sent to US by so called Indian IT consulting firm to US on a project, they are never paid comparative US salary ($5,000 per month). They are kept in substandard standards in US called “guest houses”. While they receive a meager monthly allowance in US, they work real long hours for the US client company, solve their problem and create the scenario where the Indian IT company makes thousands and thousands of dollars.
Many large US companies are unable to run their businesses properly. These inefficient managements are trying to export IT and related jobs to India to save some cost to continue making their own job performance secured. If Indian companies are banned from trading bodies like this, three good things will happen. First, the inefficient management of the US Company will have to go. Second, the Indian IT companies will learn to become innovative and compete with the rest of the world on a fair ground. Third, the people in US will be able to receive legitimate employment that they deserve. If this is not done, the relationship between citizens of India and US(or other Western countries) will become extremely poor. That will be devastating and irreparable for India.
We should encourage Indian Government is banning IT companies who are trying to take advantage of low exchange rate and salaries in India and the West. India should not provide tax incentives in any manner to these companies. India must think how she will feel if African countries start taking away Indian jobs by supplying cheap technical workforce or through outsourcing in Africa? The perception of fairness is the best political and diplomatic maturity for any country in the World.