Quarterly Update on India – Poor leadership and shrinking Outsourcing opportunities

Quarterly Update on India – Poor leadership and shrinking Outsourcing opportunities

If history teaches us anything it is that great leaders grab opportunities to reform and reposition nations to make full use of fleeting opportunities in a world of accelerating change. So too leaders and captains of industry, where they have advantages, must work relentlessly to capitalise, reposition and innovate ahead of the competition to retain, evolve and enhance their markets. Few could disagree that the Indians are the masters of offshore outsourcing. Why then do they squander their clear advantages to evolve and control their market share against increasingly less able competitors?

The strongest opportunity to understand this more fully comes from studying the dyer lack of leadership from India’s increasingly inept prime minister, Manmohan Singh. Swept in with a powerful mandate of reform and modernisation for a second term two years ago, Singh has disappointed the region’s aspirations and squandered a once in a life time opportunity (two consecutive terms with a strong mandate) to lift the vast population of this Asian powerhouse into a more balanced and equal modern democracy.

Leaders of both India’s government and its outsourcing industry mirror each other with uncanny parallels – painfully slow decision making, inadequate and misdirected investment, lack of vision, ongoing corruption and scandals, dynasty families, under-exploitation of huge people resources, all connive to ensure that full and deserved potential is not achieved.

Singh has failed to capitalise on India’s pole position in emerging markets, narrow the gap with China while the West’s economies are in ruin, failed miserably to attract foreign investment, fully address inflation, address and reform the tax-system, bolster farming production, open the markets to foreign competition, address currency fluctuations and address corruption in how the government procures its services. The 79 year old Singh does not lead his 1.31Bn people or inspire his entrepreneurial wealth generators.

The unparalleled economic power vested in the top four outsourcing companies Infosys, TCS, HCL, and Wipro, between them holding over $9Bn in cash, has not helped them to capitalise on their pole position as innovative deliverers of IT and Business back office services, this despite the West’s economic tumble in 2008 and the deteriorating position today. Western competitors are stilted by politics (HP firing their third CEO and the board ripping itself apart), Atos trying to swallow Siemens, CapGemini lost at sea, IBM and BTGS restructuring, Dell undecided as to being in services or hardware, financial issues plaguing Getronics, Unisys and others, Capita and Serco landlocked in the UK, etc etc. Clearly no amount of cash will drive the Indian offshore companies to acquire onshore companies, even gems like Logica. A large acquisition would facilitate retention of overseas funds and repatriation when currency fluctuations suit the strategy. Lack of leadership in this area will cost them dear in the mid and long-term. Acquisitions can also “cure” things like politically scarce work permits and add respectability. Even game changing alliances with in-situ Western competitors have never materialised. Why is this? One reason – the Indian leadership are engineers and engineers build, they do not buy.

It gets worse.

Offshore order books are not showing advances anywhere near where they ought to be with the West’s need to save money by outsourcing. This parallels India’s growth rate being downgraded from 9% and a mere 7% this year. The drive for external growth ignored India’s home market and allowed IBM to walk in and secure the “largest internal to India outsourcer” title a few months ago. Neither have the five leaders addressed “people” inflation and attrition successfully which continues at alarming rates. New processes and remote management tools such as Ipsoft, eliminate the need for people, a major threat to all outsourcers of course but these tools come from the US and Europe, where is India’s leadership in this regard? We see no strategic repositioning, invention, new or innovative approaches – Indian offering services remain “well engineered” but business as usual. The world has changed and is dramatically changing as we speak. We need something better.

Now is India’s time – whilst the Western competition dithers and is introspective Indian leadership, permanent long-term European investment and clear, honest vision around quality issues, “rework” statistics, hidden costs of ownership, staff attrition and consistency must come to the fore soon, or the likes of near-shoring, software tooling, new process controls, political legislation / nationalism and good old “client choice” will see to India’s ambitions and pre-eminence.

Posted in Outsourcing Comments: 3 comments


3 Responses to Quarterly Update on India – Poor leadership and shrinking Outsourcing opportunities

  1. 6cve7yMG says:

    There are noticeably big dollars to recognize about this. I suppose you produced certain good points in attributes also.

  2. Gnarly article mate, keep up the good work, just shared this with my friends.

  3. Robert morgan says:

    Many analysts lack the neutrality to be truly objective, even fewer have lived in the industry of which they comment on for more than a few years.
    Burnt Oak is and has been at the heart of the industry for 25 years.
    We call as it is!

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