I recall some years ago, reading about the engineering talent scattered
across Eastern bloc countries like Romania, and China emerging from its
Communist sleepover into the corridors of open-market Capitalism. The
feeling that some day these guys would raise their quality and
organizational levels, beat the language barrier and be a major
challenge for the Indian industry was just a premonition then. Sure
enough, there's evidence of engineering services being off shored to
more cost effective shores like Thailand, Philippines, Vietnam, Korea
and China. It makes sense, considering the levels of inflation we're
witnessing -- the trade press reports of a 5-year rise of 25% in
entry-level salaries and 18% in rental costs that troubles the industry,
presently worth $11 billion.
It's not just the West that's finding them cheaper, our companies are helping grow those markets too. The quest for increased margins and new markets beckons all alike. Mahindras, Bajaj, NIIT, Tata Technologies, they've all done it, and with good reason.
But what surprises me, is that I completely missed a whole new front - domestic price competition.We have what, 700 million living in rural areas! Who would've imagined the pace of infrastructure development (fibre optic networks, telecom, transport, etc) over the last few years, would ever take place? Looking back, it's like a revolution crept up and caught us unawares.
Even an infinitesimal percentage of that corpus, with exposure to 4 years English-medium schooling is deemed fit to handle the rule-based back office work like digitization of civic administration records, account opening forms, health records or basic verification work. Coupled with a purported 38% price advantage over an urban setup it's no wonder that everyone from the $ 1 billion BPO major Genpact to the CEO of a rural BPO are excited at the potential, estimating it to grow from the present 5,000 to a whopping 150,000 strong in 5 years! Over time
What does it herald for the 800,000 strong urban-centered BPO industry, which is at least in part, due to be rural-sourced itself? The same argument that Indian BPO firms sell to the West to counter allegations of job loss. It provides you with an opportunity to repositino yourself and shift up the value chain. But in this case, it's not so much an opportunity as a challenge. Even if say, 1% of the urban BPO industry is rural-shored, it will be forced to re-invent and re-position itself. And I'd only expect that figure to grow as we move further away from the Gandhian ideal of self-sufficiency at the rural level.
We will I think, see a phase of animosity toward our rural cousins. Who doesn't feel the pain of a livelihood threatened by shifting industrial patterns. And a little reverse migration perhaps, but the big thing someday, is going to be a forced step up the value chain.
Imagine a new breed of entrepreneurs innovating to create and deliver a new line of products and services. Visualize innovation at the micro-levels as opposed to the present aggregation of Tata, Ambani, and other conglomerates at the macro-level. Small will be big. The infrastructure and resources will be there, or are already getting there, and people will be forced to get out of the rut and think big.
I think the potential for that change and the employment generated by it will cause a major shift in our relations with the West bloc someday soon. We'll be trading with them more as peers, and evolve to be a service nation (a step up from the industrialized goods producing nation stage - which we never really reached with China beating us to it).
From employment seekers to employment-generators. From potentional enablers to potential generators. All from having done unto us and we do unto them ;)
The only thing is, I wish someone had the political spine to advance a little population control in this country. There are 4 families (across communities) in my neighbourhood, with 3 progeny apiece. In these times! What mindlessness and criminality of deeds! Where are we taking this world. And these aren't even some rural semi-literates. They're the schooled, yet un-educated, noveau riche, bourgeois.
It's not just the West that's finding them cheaper, our companies are helping grow those markets too. The quest for increased margins and new markets beckons all alike. Mahindras, Bajaj, NIIT, Tata Technologies, they've all done it, and with good reason.
But what surprises me, is that I completely missed a whole new front - domestic price competition.We have what, 700 million living in rural areas! Who would've imagined the pace of infrastructure development (fibre optic networks, telecom, transport, etc) over the last few years, would ever take place? Looking back, it's like a revolution crept up and caught us unawares.
Even an infinitesimal percentage of that corpus, with exposure to 4 years English-medium schooling is deemed fit to handle the rule-based back office work like digitization of civic administration records, account opening forms, health records or basic verification work. Coupled with a purported 38% price advantage over an urban setup it's no wonder that everyone from the $ 1 billion BPO major Genpact to the CEO of a rural BPO are excited at the potential, estimating it to grow from the present 5,000 to a whopping 150,000 strong in 5 years! Over time
What does it herald for the 800,000 strong urban-centered BPO industry, which is at least in part, due to be rural-sourced itself? The same argument that Indian BPO firms sell to the West to counter allegations of job loss. It provides you with an opportunity to repositino yourself and shift up the value chain. But in this case, it's not so much an opportunity as a challenge. Even if say, 1% of the urban BPO industry is rural-shored, it will be forced to re-invent and re-position itself. And I'd only expect that figure to grow as we move further away from the Gandhian ideal of self-sufficiency at the rural level.
We will I think, see a phase of animosity toward our rural cousins. Who doesn't feel the pain of a livelihood threatened by shifting industrial patterns. And a little reverse migration perhaps, but the big thing someday, is going to be a forced step up the value chain.
Imagine a new breed of entrepreneurs innovating to create and deliver a new line of products and services. Visualize innovation at the micro-levels as opposed to the present aggregation of Tata, Ambani, and other conglomerates at the macro-level. Small will be big. The infrastructure and resources will be there, or are already getting there, and people will be forced to get out of the rut and think big.
I think the potential for that change and the employment generated by it will cause a major shift in our relations with the West bloc someday soon. We'll be trading with them more as peers, and evolve to be a service nation (a step up from the industrialized goods producing nation stage - which we never really reached with China beating us to it).
From employment seekers to employment-generators. From potentional enablers to potential generators. All from having done unto us and we do unto them ;)
The only thing is, I wish someone had the political spine to advance a little population control in this country. There are 4 families (across communities) in my neighbourhood, with 3 progeny apiece. In these times! What mindlessness and criminality of deeds! Where are we taking this world. And these aren't even some rural semi-literates. They're the schooled, yet un-educated, noveau riche, bourgeois.
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