Home » Profits and Pitfalls of Working with India
Profits and Pitfalls of Working with India
Posted: Thursday, May 11, 2006
by Mahesh Lalwani
Pacview, Inc.
N-LEFT: 0pt MARGIN-RIGHT: 0pt" align=left>The experiences of the technology companies in the last few years who failed to navigate the rapid changes brought about in their marketplace by disruptive flattening forces may be a warning to all the businesses, institutions that are now facing these inevitable, even predictable, changes but lack the leadership, flexibility, and imagination to adapt - not because they are not smart or aware, but because the speed of change is simply overwhelming them.
The Internet now makes this whole world like one marketplace. This infrastructure is not only going to facilitate sourcing of work to the best price, best quality, from the best place, it is also going to enable a great amount of sharing of practices and knowledge, and it’s going to be ‘I can learn from you and you can learn from me’ like never before. It’s very good for the world. And India has emerged as back office hub for all kinds of services for the world.
Two thirds of Fortune 500 companies have setup offices in India for this reason. Most think of its 300 million-strong well-educated and ready-to-spend-more middleclass as an opportunity of our times. It’s a market to capture, and a talent pool to tap into. Big multinationals are moving forward in that direction and it gives them a competitive edge. A competitive edge you wish you had.
Well, it’s finally time to compete with the global leaders. Time has come for every business to benefit from a new trend in global economy. Partnering with India. The global economy is going to drive more integration (of India into it) and integration is going to drive the global economy.
PROFITS:
Let’s begin with why it makes sense to work with India:
“India provides quality services at competitive rates (not cheapest)."
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It used to be that work would go wherever cheapest labor is available. That is not the case with India. Sure, it’s cheaper than here but not the cheapest. More and more work is going to India because it provides good quality services at competitive rates. Thanks to the dot-com-bust, more and more companies in India are learning that quality brings return business. And there are plenty of clients who would outsource every aspect of their business that can be done remotely. Vast English speaking population sees outsourced jobs as gateway to better life. They come to work every day (and night to synchronize with us here) with such enthusiasm not seen for that type of work and reward anywhere else.
The drive for quality also brings Indians to US companies for products and services for their needs. If Dell, GM, Microsoft, and Citibank have benefited over past several years, I bet you will find clients keenly interested in your expertise now.
So, you are excited to be working on innovative new technology but have a shoestring budget to create a prototype. Welcome to outsourcing to India. Getting prototype done in India gives you a chance to evaluate the Indian partner without loosing your shirt. If you get next round of funding, you already know whether to continue working with same company or look for a better partner.
Routine & Maintenance Work |
To maintain legacy applications you have tried hiring consultants here and the one who lasted longest was with you for 6 months. It’s not worth the effort anymore. Most Indian companies would compete for your routine maintenance work for long-term and do it more efficiently and effectively for far less money. And remember since it uplifts their standards of living, they do it passionately.
If you find the right company to outsource your work to, you can focus your own resources on doing more of what you do better and stay lean. Your Indian partner can surprise you by doing more than just what you originally thought was possible to do remotely. Most of the time outsourcing increases your own productivity, increases sales, and increases customer satisfaction and loyalty. It builds value.
The other side of productivity coin is ramping up demand for leadership skills building, mentoring, and management consulting within Indian companies. Concepts nurtured and mastered by the US companies command high price from their counterparts.
“Cost benefits of sending work to India can range from 20% to astonishing 70%."
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If it weren’t for saving big money for investors and stakeholders, businesses would still be dealing with labor associations on pay hikes for things that can be done at a fraction of the cost outside. The cost benefits of sending work to India can range from 20% to astonishing 70% sometimes. In all cases it’s the quickest route to ROI and that should convince your CFO to start asking why aren’t we doing it.
PITFALLS:
Are you thinking everyone else is doing it and I should too? Sure. Like each new wave, just take some time to see if it’s really for you. Study all your options, do market research for services you plan to offer. Evaluate your Indian partner, and measure performance if you plan to avail their services. Here’s is list of things that can and do go wrong:
There is very little privacy in life of an average Indian. It is very common for people to ask each other salary they make and everything else that is not asked out of courtesy in the USA. If people do not worry too much giving such personal information, Corporations can hardly ensure privacy of your consumer data because companies are run by people.
Educating everyone involved and setting-up formal processes for handling sensitive information are keys to eliminate risks surrounding privacy. Learn to politely say ‘No’ few times a day if asked for information that you are not comfortable divulging.
“A daunting 20-hour flight followed by 5-day jetlag is definitely overhead."
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Geographically India is farthest from us, twelve time zones away. When we are looking forward to a good start on any day they are tired of that day and simply retiring and vice-versa. When you find out something important during middle of the day here, they are probably dreaming about your finding (its middle of the night there) or having nightmares. You may have to wait to share it with the team in India.
If they have a question on your specification, you would prefer they send you an email instead of calling you when you are fast asleep. We all loose some time and productivity due to this overhead.
Face-to-face meetings are sometimes required to build team dynamics, but a daunting 20-hour flight followed by 5-day jetlag is definitely overhead. Best is to entrust them with responsibility and never micromanage.
When you say a simple word ‘couple’ you mean exactly two, in India it’s open to interpretations. When someone says a couple of our engineers are working on your problem it means some, it could be 2 or 3 or more. When you hire someone on hourly basis, it is hard to validate the number of hours or number of consultants they bill you for. A company can claim that researchers on their team have PhD degrees, you will never know where from and how many really know about their company's claim. Some small businesses in India will have their employees fabricate qualifications, numbers or experience when asked by client. An art mastered by Enron.
It is highly recommended to select a proven partner and check references from past clients. Getting agreements reviewed by a local attorney, and alerting concerned parties on non-compliance as soon as they occur reduce risk of failure.
If the company you are working with oversold you on the benefits or is unable to retain the key employees and cannot deliver, what you get is low quality work and a place back to square one. Poor quality of products and services delivered is cited the main reasons why clients in the USA change the vendor or supplier in India often.
Just to avoid the last minute surprises, you should start small. First get a small feature done in a few weeks and verify the quality of work done before outsourcing everything.
If responsibility can be dodged, it will be. Well, in most cases. When arriving on time for a meeting is not considered very important, deadlines will come and go. Most Indian consulting company’s executives have had experience working in the USA, but working bee does not. Dog ate my homework still rules for young fresher out of college.
You can specify the release date or you can specify what features are to be in a release. It is hard to do both and get a reliable commitment. Release dates are most reliable if people who will work on them also estimate them.
CONCLUSION:
India is a threat, India is a customer, and India is an opportunity. You have to internalize India to succeed. You cannot ignore it. Instead of competing with India as an enemy you break down your business and think about which part of the business you would like to do in India, which part you would like to sell to India, and which part you would like to buy from India.
Sending software, accounting, billing and any such work AND selling US products and services to India, is now possible for all of us. Whether you should do it, depends on your objective, growth, and need. Distance, communications, lack of information, and quality etc. should not be roadblocks anymore. You should choose your Indian partner diligently and audit them regularly.
“60 percent of IT projects outsourced to offshore companies fail to meet the deadline and budget."
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About 60 percent of IT projects outsourced to offshore companies fail to meet the deadline and budget in comparison to moderate 23 percent of projects outsourced to local US companies.
Following are some pointers to improve your chances of success in working with India:
- Discover the best way to specify your services, software or business process
- Keep in touch with your outsourcing team without micromanaging
- Communicate directly with development team by email, instant messaging, and telephone.
- Treat the outsourced Indian team as part of your own team
- Require local leadership and entrust them with authority and responsibility
If you cannot do it yourself, use services of Pacview, Inc. with expertise and presence in both US and India to:
- Find the right outsourcing team that best fits your situation,
- Choose from more than a dozen proven expert teams in India categorized by skills,
- Cut your team search time by 90% - from months to just days,
- Cut your software development or BPO costs by up to 70%,
- Increase your customer base by 100% - from Bay Area to Bangalore.
About the Author
Mahesh Lalwani is Founder & CEO of Pacview (
http://www.pacview.com), your partner in custom software & speech applications. Pacview has worked with dozens of Financial Services, Healthcare, and Computer Product Development companies, helping them create successful software applications that exceed customer’s expectations. Through Pacview’s expertise in design and development, and right-sourcing talent in US and India, our clients enjoy the benefits of building value through successful software applications. Visit our site at www.pacview.com for more information.
Note: You’re welcome to “reprint" this article as long as it remains complete and unaltered (including the “About the Author" info at the end), and you sent a copy of your reprint to mlalwani@pacview.com
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