Economy

Moving Jobs from West to Asia

Last week there was a post by Jon Box in his blog about Microsoft adding jobs in India. Jon is one of my fellow Microsoft Regional Directors, from Memphis USA. I sent him back a detailed reply by email on how I feel on this important issue. Here it is:

As someone who has been running an Indian IT Services Company for last several years and with sizable portion of my business coming from USA, these are my comments.

In business the first rule of thumb – your returns are more or less dependent on your risks. You don’t take risk you don’t make money, its that simple. In fact nothing could be more risky than to resign your job and start a company. After the risk are the following

  1. To identify a need (a.k.a Innovation/Invention)
  2. Develop a Product (a.k.a. Manufacture)
  3. Package the Product and Market them
  4. Sell the Product

India/China currently does only 1 of the 5 steps in a business – Manufacture. If someone in US is worrying about us, either he/she doesn’t understand what it is to be an American or lacks seriously in self-confidence.

Risk and Products
Today Microsoft or IBM makes several times more money more than the 3 Top Indian IT Services company (TCS, Wipro and Infosys) put together. Put together they will have same number of employees as Microsoft. It might never be possible for them to overtake Microsoft or IBM. Why?. Because MS/IBM are products company – a company who’s core assets are its products which is based on IP (Intellectual Property) and Patents.

Compare this to India, though Indian Engineers are considered high in Software, we don’t have one product that is seen in store shelves around the world. The reason is simple, to develop Products and to market them requires huge capital investments which simply doesn’t exist in India. Even if you have deep pockets, the chance of a product succeeding is very low – the risks are very high. We Indians traditionally like to play it safe and we like the safe Government Jobs. We never venture into the unknown. This is the reason why Asians (including India and Japan) save money. We keep it as Gold Ornaments (Never enjoy them by wearing it but safeguard it against theft by keeping it in Bank Safe Lockers) and Bank Savings. A common man (Woman) in India investing in Stock Market is unknown till very recently. The Silicon Valley and its VC/Angel funding culture has no parallel in India. In India (until very recently) the only funding known was Debt. Equity funding was being restricted to handful of stories.

Contrast this to US. USA is certainly the land of opportunity – Opportunity created due to the risk taken by Entrepreneurs and equally by common man. I always admire at the American (and of course the Europeans) zeal for exploring and travel. To drive from East to West Coast in search of opportunity and settle down there is a everyday common story in US. It is unimaginable for me to drive down even 600 miles and settle down in my neighboring state – nevertheless go to the other end of India.

If American Companies don’t innovate/invent with their money eared, certainly the Indian Companies (with their newly earned money) will innovate and we will reap the benefits of that invention for next 2 decades.

Packaging and Marketing
Next to risk & innovation it is packaging and marketing that I consider to be core strengths of US. In fact, at my company we hired at high rates and outsourced our marketing campaign to a US Agency – because we realized it will be cheaper to do it right the first way, rather than waste money on iterations with cheaper clones.

These are the reasons why in the world today you see Coke, Pepsi and Mc Donalds everywhere.

In fact, when Coke and Pepsi came to India a decade+ back – they killed all the local Soft Drink manufactures. One of the Indian’s who soled all his bottling plants & brands to Coke; created a new empire from scratch – bottled water. In India nobody would have dreamed of buying Water, but this guy saw a need when people earn more they will demand safe drinking water, and local bodies in India will never get to give it for long. He created “Bisleri” bottled water. Pepsi was forced to follow it up with Aquafina.

[Though I am not writing on this, examples like this could turn out to be answers for India as well, on how to face “China” dimension. For example China makes finished goods at prices lower than it cost to even produce 1/4th the raw materials in some products. This is true even for India-China comparison].

Summary
Apart from these, in my experience I have seen Americans to be excellent Managers (and Japanese for their keen eye on perfection). I found it amazing on their capabilities to methodically plan and execute things.

In the new economy; companies that innovate, that take risk, that package well, succeed. Companies that don’t do it  – perish. It is same whether it is for US or India or China. It is also same for Individuals because Individuals are part of companies (in the work force).

So in summary if your Angry Coder is losing job, then the company they work for is not innovating (or) He/She is not innovating to go high in the value chain to become managers and manage the outsourced projects that have gone to India or China or to Eastern Europe. Needless to say managerial jobs will earn twice/thrice of their present income. Wow, I didn’t realize I will be ending this with a positive note like this!