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BPO Journal

Thursday, May 25, 2006

India - Week in perspective

Am visiting India after a good three years, and the difference in the country's levels of confidence and optimism is striking.

And it wasn't just about the cab driver who discussed the possibility of setting up a website or the maid's curiosity about Amway.

The Indian Railways, one of the many government-owned businesses that dominate the landscape, made an estimated profit of $2.5 bn in 2005-2006. Poor quality of service, tobacco stained platforms and long queues to book tickets are a thing of the past. Clean platforms, online reservation systems, mobile booking, frequent miles, privatization of freight carriage and a host of revolutionary ideas in the offing now mark the new Indian Railways which is galloping to keep with India's growing international image.

And India's host of technology workers, who contribute to that image, do not think of themselves as the labor force in a low-cost destination. Heck, they're the outsourcers, not the outsourcees! For example, Satyam, which is one of India's top technology service providers, has just started outsourcing some of its American work to Indian villages. There is enough bandwidth to go around, the eager, committed and educated villagers have an opportunity to stay in their village. Not only does this breathe life into the rural economy but also, there's less pressure on the urban infrastructure.

The Indian companies are increasingly becoming part of new collaborative business models that are byond the mere externalization of business processes to low-cost destinations. This best described in a recent article in the Financial Times by Tom Friedman. Friedman writes:
I was interviewing Katie Jacobs Stanton, a senior product manager at Google, and Krishna Bharat, founder of Google's India lab. They told me that Google had just launched Google Finance, but what was interesting was that Google Finance was entirely conceived by the Google team in India and then Google engineers from around the world fed into that team - rather than the project's being driven by Google headquarters in Silicon Valley.

It's called ''around sourcing'' instead of outsourcing, because there is no more ''out'' anymore. Out is over.

''We don't have the idea of two kinds of engineers - ones who think of things and others who implement them,'' Ms. Stanton said. ''We just told the team in India to think big, and what they came back with was Google Finance.'' Mr. Bharat added: ''We have entered the generation of the virtual office. Product development happens across the global campus now.''

So, that's my understanding of the country as of now - confident and hopeful. And news just in as I write - India's technology and outsourcing sector grew faster than expected in the year ending March 31, expanding by 31.4 per cent to Dollars 29.6bn - well ahead of the 26 to 27 per cent projected by Nasscom, the country's software employers' association. Exports grew by more than 33 per cent, while domestic revenues increased by 24 per cent. Jobs in the sector grew 250,000 to 1.3m.

Did I mention optimistic?

Friday, May 19, 2006

An Indian Summer

Am off to India tomorrow and will be back end of June. Will resume blogging sometime later next week post recovery from a seventeen hour flight, jet lags et al.

Sunday, May 14, 2006

I digress

Find here the text of Tim O'Reilly's commencement speech for the UC Berkeley School of Information. He talks about Web 2.0 - the significant opportunity that it presents as well as the dark side of the technology:
I urge you to think hard about the consequences of new technology. Don't just take for granted that technology will bring us a better world. We must engage strenuously with the future, thinking through the dark side of each opportunity, and working to maximize the good that we create while minimizing the harm.
The speech appositely informs and inspires.

Hear hear.

Saturday, May 13, 2006

Belated Birthday

Missed marking one year in the sphere on May 8th.

Oh well, BPO Journal is a year old now, and with no lies, damned lies and statistics to back it up, you'll just have to take my word that it's been a good year. To the near sixty regulars and oft first-timers who frequent the site everyday, thanks for your comments and feedback.

Tuesday, May 09, 2006

No small fry

An article in the theory and practice section - a weekly look at people and ideas influencing managers - of yesterday's Wall Street Journal discusses how smaller companies are increasingly tapping offshore labor markets, as larger companies have for years. A summary of tips for managers at small firms thinking of expanding overseas:

  • Locate overseas offices in regions that are home to bigger, multinational companies
  • Monitor quality closely; errors can really hurt a small business
  • Ensure that key executives visit frequently, and plan for the travel costs
  • Offer consistent company-wide training so all workers use similar processes
  • Track retention of overseas workers, as a few key departures could be crippling

Saturday, May 06, 2006

Outbound flight

Interesting article in the Wall Street Journal about the newest twist in global outsourcing - U.S. pilots fleeing the depressed North American airline industry to work in far reaches of the world where aviation is booming. The Journal points out:
After the 2001 terrorist attacks stifled air travel and sent the U.S. industry into its deepest decline ever, more than 10,000 U.S. pilots were laid off, and many more took early retirement. Despite subsequent hiring by a few healthy carriers, including Southwest Airlines, thousands haven't been able to find new flying jobs at their old pay grades.
Not until now. The airline industry is expanding rapidly in China, India, Southeast Asia and the Middle East. As these regions grow more affluent and loosen aviation restrictions, the demand for travel is soaring. Existing carriers are adding routes, and several new airlines are in order. So, like British and Australian pilots who have long taken their skills offshore, more Americans are plying their trade wherever they find work. Apparently, U.S. pilots are working as far afield as Bolivia, China, Qatar and Vietnam. Hong Kong-based Cathay Pacific Airways and Singapore Airlines are hiring more Americans, as are carriers in Taiwan and South Korea, and increasingly, in India.

The trend is symbolic of a growing global shortage of well-trained commercial pilots. The Journal points out:
Aerospace giant Boeing Co. estimates the global jet fleet will grow to more than 35,000 airplanes in 2024, from fewer than 17,000 in 2004. Boeing pegs demand for new pilots at nearly 18,000 a year through 2024. China alone will need more than 35,000 new pilots over 20 years, and the rest of Asia will need 56,500, the company estimates. Many countries are currently unable to train enough pilots at home. The result: a global bazaar where experienced pilots go to the highest bidder.
Norwegians and Venezuelans are flying in China, Egyptians and Russians in India, Jamaicans and Iranians for a Japanese carrier. And as the airlines face challenges of training enough "mature captains" quickly, they're responding by filling in with expatriates. Four out of five pilots at Qatar Airways are foreign. There are 120 to 150 foreign pilots in mainland China. And India counts more than ever. Deregulation has spawned startup airlines, an influx of international flights, and 20% annual passenger growth. India's potential demand is over 2,500 new pilots by 2010. At Jet Airways, the nation's largest private carrier, 111 of its 685 pilots are foreign. Air Deccan has 75 foreigners among its 250 pilots, and is setting up its own flight school in Bangalore.

The incentives are strong too. India's Air Deccan is offering $8,000 to $15,000 a month to foreign captains, according to Mr. Gopinath, the managing director. A captain in the U.S. on Northwest's smallest jet earns about $9,000 a month, while a captain on United Airlines' largest plane earns about $15,000, according to a recent survey by Air Inc. William Goodwin left the U.S. in 1994 after working for two airlines that went under and a third that was acquired. He jumped to Korean Air in 2000, where as a captain of 747s he earns $152,000 a year after Korean taxes. The 54-year-old pilot says he hopes to stay until he retires at 60. Mr. Baedke, the former Northwest pilot who now flies out of Honolulu for Jalways under a crew-leasing contract, earns $100 an hour, or $105,000 last year. He expects to begin training next month to become a captain, a process he says could take 2 1/2 years. If he succeeds, his pay will climb to $150 an hour for the first 50 hours flown each month, and $180 an hour for anything exceeding that.

This flight has all the signs of a permanent structural shift. Perhaps, the foreign carriers are employing U.S. pilots only temporarily until they can staff up with their own citizens. But the pilots are warming up to it while the Airline Pilots Association back home worries about brain drain and much the same issues that India munched while its software engineers explored and continue to explore US horizons. Friedman forgot to write about this one in the flat world.

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