Whilest, off-shoring / outsourcing has helped the Indian economy to rise like a Phoenix from the ashes of the British Raj, American / European politicians and educators alike, issue a favourite warning of doom and gloom. Time and time again, they reiterate, United States and Europe are falling behind India and China in math, science, and ultimately, high-tech jobs. Which leads everyone to ask the question, whether American and European kids should be forced into doing their math homework? However, some scholars are of the opinion that it might be too late!

Instead, Vivek Wadhwa, an American-Indian entrepreneur and scholar argues, US should and must focus on graduate-level engineering programs, if it wishes to stay competitive and prevent the loss of high-skill jobs to countries, such as, India and China. Countries that annually churn out engineering graduates in the millions.

And, Mr. Wadhwa should know, who as an Executive-in-Residence at the Master in Engineering Management programme at Duke University, has conducted a series of studies on engineering graduates and outsourcing.

He believes, the biggest problem is the focus of American policy makers on school education, whereas, the stress should be on graduating more Master’s and Ph.D. level engineers. “The fact is that even if we fix our K-12 system, it will be 15 years before we see any benefit,” he explains. “And that is 15 years too late.”

Predicting that cutting-edge R&D projects will begin to move on a much faster scale to India, much the same way manufacturing shifted base to China, with the latter undercutting ever larger chunks of U’s manufacturing industry. Mr. Wadhwa opines, if jobs are to be retained in USA, higher-skilled engineers are the need of the day. And, he should know, as on a recent trip to India, he was simply blown away by the innovation to be seen at companies, such as, Hindustan Computers Limited (HCL). “Give it five years, and you will see a wave of outsourcing of critical research and design jobs going to India,” he says, a trend that has already started, albeit on a smaller scale than IT outsourcing.

Analysing data on graduation rates of engineers in the US, Indian and China, together with Gary Gereffi, Director of Duke’s Centre on Globalisation, Governance and Competitiveness, Mr. Wadhwa published the results in a recent study titled: “Where the Engineers Are.”

What the research study throws up is, US produces 70,000-engineers versus India’s 350,000 and China’s 600,000 engineering graduates. However, since the word ‘engineer’ translates differently in China and India, signifying anything from a software engineer to an auto mechanic, the actual numbers of undergraduate-level engineers in the US, it could be said are quite competitive.

Even so, Wadhwa feels the graduate level is what US needs to worry about. As well, adding the strengthening economies in China and India to that, and US could see a trend in engineers with graduate degrees, 40 to 50% of whom are foreign-born, going back o their home countries. Meaning more Americans are needed to get into these programmes.

Himself, among the first to turn to outsourcing to cut costs, Wadhwa coming straight to the United States from India to do an MBA, formed two software companies, and in the early 1990s began outsourcing software programming, first to Russia and then to India. Later on, as an engineering professor, he had the opportunity to hear his undergraduate students voicing fears over losing jobs to a trend he had helped pioneer.

However, other education experts express more sanguinity regarding the outsourcing trend. James Plummer, Dean of Stanford’s School of Engineering, believes US will continue to attract the world’s best and the brightest, as US universities offer a top-grade education. But, what Plummer fails to realise is, if the jobs are in India or China, it is to these countries that the best and the brightest will be attracted enough to return.

“It’s certainly clear that the outsourcing that we’ve seen over the last decade or so will continue,” he says. “[But,] I don’t think that necessarily bodes horror for us in terms of engineering manpower supply.”

In the meantime, in a new twist to dinner table arguments, such as, Thomas Friedman (journalist) recounts in his book The World is Flat, relating how he chided his daughters over doing their homework: “Girls, finish your homework, people in China and India are starving for your jobs.”

And, that is just the case, the crux of the story, as India’s off-shoring / outsourcing success story drives even the lower strata of India’s class conscious society made up of maids, cooks, chauffeurs, washer women, sweepers, garbage pickers et al struggling to send their children to English medium schools, to help raise them to a standard, where they are suitable candidates for a job in India’s BPO / IT / ITeS sector. A job that will help earn them many times what they can earn working at lowly tasks in the houses of the rich or the famous.

Outsourcing is for India much what the Industrial Revolution was for the West. While, the advent of the West’s industrial revolution saw a social class made up of maids, cooks, butlers reinvent themselves as factory workers, outsourcing in India is seeing to it that the lower working class is driven to transform itself into educated service providers! There lies the difference! The industrial revolution in the West did not necessitate an education and only provided higher wages for less back-breaking work. Whereas, a desk job, even a monotonous BPO job is driving India’s lowly workers to give their children an education that will allow them to boast of how much they earn, just by sitting all spruced up and clean at a desk!

It can be safely concluded that US and Europe will soon be outsourcing their future to India and, perhaps, China! The future of the West lies with the East!

Source: www.business-standard.com

For long, the West has proliferated stories of it being only a matter of time before China leaves India red in the face, even while India has had a head-start in the field of off-shoring / outsourcing. China too, has indulged in such wishful thinking, promoting the same story of its information technology (IT) outsourcing sector being a serious rival and contender to India’s position as undisputed market leader in the field. However, a scheming West and hypocritical China find it hard to dent sub-continental self-confidence, since actual figures tell a different story to the one they tell.

Case in point, for the year 2006, China raised $7.7-billion from its IT services market, a 17.8% growth compared to 2005. On the other hand, NASSCOM figures reveal, India’s software and services exports for 2006-07 grew by 33%, mopping up $31.4-billion, with the domestic segment garnering $8.2-billion, a clear 23% growth rate.

Adequate proof then, even as analysts confirm, India is four times more in demand for outsourcing services, than China. Leading Ameet Nivsarkar, NASSCOM Vice President to claim: “While, China may be seen to have potential, it is India, however that has the edge.” So much so, he says the clients of Indian outsourcing vendors just expect more out of services provided, which has led to many Indian vendors, such as, Infosys, TCS et al to set up base in places, such as, China.

And, it is Indian outsourcing firms that employ and train Chinese professional that are also adding to China’s outsourcing revenues. Only a year or so ago, Ding Defen had never heard of Infosys Technologies, India’s largest IT service provider. Today, the young Chinese is interning at the Bangalore head-quarters of this Indian IT giant. The very fact that Indian firms are training young professionals from around the world, rival countries like China, Ireland, Canada, Denmark, etc., countries trying to compete for a larger slice of its outsourcing pie, highlights India’s confidence in its talented young professionals, and the maturity of its business leaders.

A 4th year student at Huazhong University of Science & Technology in Central China’s Wuhan city, Deng says: “I wanted to learn from India.” So too, does the Chinese Government, who last September persuaded Infosys to accept 100-Chinese students for 7-months of training and work experience at its offices in Bangalore.

Anxious to emulate India’s success in the field of IT off-shoring / outsourcing, China is courting Indian expertise and investment to help build its own software services industry, in order to undercut and reduce the American influence of US Hewlett-Packard (HP) and International Business Machines (IBM) in its domestic market.

Sethu Nambiar, Vice President, Satyam Computer Services in Hyderabad, India, an Indian rival of Infosys Technologies commented on training their mutual rivals: “It’s a very funny and tricky situation. You have a potential competitor seeking its competition’s help to compete.”

It is incidents, such as the above that help explode the myth that China is a key challenger to India in off-shore supremacy says a Forrester research report on the subject, including language, attrition and intellectual property (IP) issues that plague multinationals in the land of the Chinese Dragon.

What is little known is that locations, such as, Philippines and Brazil are seeing their global delivery model (GDM) growing at a faster pace, two-and-a-half times the rate of China, mainly on the strength of a larger English speaking population, as well due to large investments, led by Accenture.

As such, analysts are quick to note that China does not enjoy any significant cost advantage. A KPMG – NASSCOM study throwing up some figures says the average IT salary in China is around $10,000 a year, while an average BPO salary stands at $7,634 a year. While, the average salary of $9,867 and $7,779 a year in India’s IT and the BPO sectors, respectively, show salaries figures are close in the two competing IT off-shoring rivals.

It is China’s relatively small number of IT professionals with English language proficiency that allows them to command higher salaries.

Vikash Jain, Engagement Director at Everest Group, a research firm says: “Besides, as of December 2006, China’s headcount with regard to outsourcing was less than one-tenth of that of Indian firms.”

Various IT consulting projects from the telecommunication industry and the Beijing 2008 Olympics are responsible for benefiting the Chinese IT consulting market helping its system integration market to pick up on high-speed growth.

Whereas, Chinese IT service providers are carving a niche for themselves, establishing themselves as key players for near-shore destinations of Japan and Korea, the reason why they are succeeding in doing so is mostly due to historical inter-dependencies, cultural and linguistic similarities and physical proximity to the two Far Eastern countries. While, Japan and Korea contribute around 60% of China’s IT services export revenues, including a significant chunk of BPO revenues, the US and UK markets account for the rest.

However, according to IDC, 75% of the world’s $320-billion IT service and outsourcing market was accounted for by the North American and European markets. With these two markets expected to expand more than 60% annually in coming years, they will do so at almost twice the speed of the Japanese market.

Sheetal Bahl, Research Director of Everest Group says: “China is unlikely to substitute for India or other mature off-shore destinations in the short or the medium term. At best, it will work as a supplement that matures over the years.”

Meanwhile, Indian IT service providers, such as, Satyam, Wipro, TCS and Genpact have already set up base in China to tap its market for outsourced projects from US, Europe, Japan and Korea.

“With the presence of Indian vendors in the Chinese market, the Chinese firms might face difficulty on the global front. The Chinese outsourcing firms are more focused on the domestic market compared with Indian companies,” says Anish Zaveri, Associate Director, KPMG Advisory.

Even as, the Dragon tries to get a grip of BPO and IT outsourcing, already the Tiger has moved on to become the hub for other types of outsourcing KPO, LPO, PPO, and what have you! It is hard to conceive, a country like China can overtake India as the world’s outsourcing hub.

First of all, Indians speaking English outnumber English speaking Chinese. And if, the Chinese have taken to learning English in large numbers, their sing-song Chinese accent makes it difficult to understand their spoken English. That is not the case with Indians spoken English, after all, Sanskrit is the mother of all languages, and a large number of Indian words were incorporated by the British into the English language, during the time they spent in India.

Secondly, Indian Universities turn out more employable professional candidates for the workforce than China does.

Thirdly, India’s laws and regulations, a legacy of the British afford familiarity and easy manoeuvrability for off-shoring / outsourcing western countries than Communist China.

Fourthly, India has experienced business men and an established business infrastructure, unlike China, who is making a recent entry into the world of high finance and commerce, after many years of a strict communist regime.

Fifthly, China’s one-child policy is seeing a population greying far faster than that of India’s. Not only does India have the youngest workforce in the world, it can sustain and replace those who retire in the coming years. An area, China and the rest of the world will be hard put to compete!

Thus, the Indian Tiger slays the Chinese Dragon! Another myth the West has propagated, exploded!