year's placements at the top-rung business schools in the country
reflect a changing trend: the IIMs are becoming export-oriented
units, catering to the white-collar needs of overseas multinationals.
Already, some Indian companies have had to settle for the lesser
institutes owing to their inability to match the salaries offered
by the MNCs. This year, a student at the Indian School of Business,
Hyderabad, topped the charts, with an all-time high offer of $233,000
(Rs 1.07 crore) per annum. However, Indian industry couldn't stretch
beyond Rs 30 lakh p.a., nearly a fifth of the overseas package.
This, ironically, is a healthy phenomenon,
for it recognises two issues. First, flight of talent overseas
reflects the growing global competitiveness of Indian B-schools.
Secondly, domestic industry's hunt for talent will put pressure
on the second-tier institutes to raise their level in every sense,
be it the screening process, teaching faculty or the curriculum.
All this will drive the B-schools to deliver managers who will
make Indian companies globally competitive. Indeed, intra-IIM
pressure is already at play: In 2004, the highest domestic industry
offer was made to a student of IIM Lucknow at Rs 14 lakh p.a.,
compared to Rs 12 lakh p.a. at IIM Ahmedabad, which traditionally
is a notch higher.
Indian companies, even those with global
designs, seek to derive competitive advantage vis-à-vis
MNCs through lower labour costs at every level, both blue-collar
and white-collar. In fact, Indian companies pay less compared
to the MNCs for overseas assignments as well. Over the last few
decades, technology- and capital-led competitive advantages have
petered out to a large extent, with both proving to be minor constraints.
It is clearly managerial skills that have come to dominate the
cutting edge of business. It is here that talent, of the kind
that can be found in Indian B-schools today, counts.
Not surprisingly, the intake of Indian talent
by Wall Street's finest is on the rise, with over 30 placements
thus far from the IIMs.
For the knock-on effect of the IIMs to rub
off on other schools, there is need for greater private participation
in setting up B-schools. Furthermore, private endowments in government-run
institutions must improve to ensure greater integration with industry.
Importantly, the government's programmes must actively fund high-school
education. China has shown the way in this regard. The results
are there for all to see: A technical manpower base that powers
its factories, and in turn, growth. India could do the same with
its managerial talent.
The Next Wave Of Outsourcing
|Outsourcing: Now includes
in the mid-1990s, the world woke up to the fact that Indian it
companies were good at fixing code. By the time the Y2K bug hit,
they were clearly in mid-season form and offered to write, maintain
and fix (together called Application Development and Maintenance,
in industry jargon) software. Their low cost structures allowed
them to transition a major portion of the work back home. Package
implementation (think ERP, CRM) of numerous vendors like sap,
Baan, PeopleSoft and Oracle came next. They also discovered customers
were happy if 'pain points' were addressed and the BPO industry
came into being. Indian it companies decided that they would not
just implement, but also advise their customers on what technology
to opt for and how to implement it. Thus was born the consulting
practice, a work still in progress.
With its 'follow the sun' mechanism, the
Global Delivery Model or GDM (despite its name, it means moving
work to India), with its low costs was a disruptive framework.
The first wave of outsourcing essentially meant 'offshoring'.
However, there were limits to what GDM could
deliver. Recent decisions by companies like Apple, Pervasive,
PowerGen, Sykes and others to shut captive centres, is a telling
indictment that running a captive model without sufficient scale
isn't viable (and of, at another level, customer dissatisfaction).
The next wave of outsourcing includes contract research and development,
and infrastructure management services, all of which require a
greater onsite presence. And more political backlash on outsourcing
is just an election away.
So, companies are perfecting GDM Version
2.0; one company, Infosys, calls this 'Collaborative Distributed
Development Model'. That's an ungainly name for sure, but it recognises
that business models are more important than choice of destination.
Its core premise is about marrying the best of skills available
at lowest cost anywhere across the world to timely delivery. Outsourcing
now includes 'nearshoring'. That is the reason Wipro, TCS, even
Transworks are making selective acquisitions-to be near to their
customers. While there are advantages of having a near shore presence
(say Mexico to serve the us market) or low-cost East Europe to
serve the UK, French and German markets, companies will have to
battle new challenges now. These include protecting margins, ensuring
availability of trained manpower, cross cultural integration and
perfecting delivery processes across timelines and borders; this
is sure to test their mettle. GDM Ver 2.0 is both an opportunity
and a challenge.
A Confidence Issue
|Becks' Hindi tattoo: Not
his only claim to fame
guy Dolle may have puckered up his nose at the thought of being
taken over by a company that was "full of Indians",
but the fact remains that Mittal Steel, despite its name and the
passport of its promoter, is not an Indian company. It is as European
as an ABB, a Renault or a Nokia. Yet, its successful bid for Arcelor
is being treated by most Indians as a victory for the country.
Granted that L.N. Mittal is still an Indian citizen, but it must
also be borne in mind that his investments in India till date
are insignificant (and lower than, say, IBM's or Cisco's). So
how does one explain the media frenzy and public interest in this
deal? For that matter, why do we, as a nation, spend so much time
following the careers and achievements of people like M. Night
Shyamalan, Arun Sarin, Sabeer Bhatia or Gurinder Chadha, all people
of Indian origin, who have achieved success in the West. In fact,
we extend this frenzy even to David Beckham's Hindi tattoo and
to Uma and Maya Thurman's Indian first names.
We now have enough home-grown heroes in almost
every field of human endeavour, but in the popular psyche, success
in and recognition from the West-even on a relatively modest scale-counts
for as much if not more than achievements at home. This points
to a crucial flaw in our national character: a lack of self confidence.
The roots of this can, perhaps, be traced back to the racist and
Eurocentric education system imposed on India by Thomas Babington
Macaulay in the 1830s, much of which remains unreformed till this
But things are slowly changing. The process
of economic reforms has led to unprecedented social churning.
Non-metropolitan India, long derisively dismissed as PLT (people
like them) by the Wogs, is now aggressively claiming its place
under the Indian sun. Just look around; small towns, and even
villages, are throwing up new superachievers everyday. India is
slowly, and in spite of herself, waking up to her true potential.
Once this process gathers critical mass-and the logic of empowerment
underlying reforms will ensure that it will do so in a few years-we
will, as a nation, be able to place foreign and domestic achievements
in perspective and do justice to our home-grown heroes as well.
Meanwhile, there's no harm in celebrating Mittal's consolidation
of his position at the top of the global steel industry.