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Low-cost
carrier Southwest Airlines pioneered the idea of budget carriers and in
the process disrupted the business of previously well-entrenched players
in the US market. With Indian companies playing in a globalised arena, Dr
Kevin Freiberg, author (along with his wife Jackie) of NUTS!
Southwest Airlines' Crazy Recipe for Business and Personal Success, which
has sold over a half a million copies worldwide, is sought after on the
speaking circuit and works with companies such as General Electric, SAS
Institute and Ritz-Carlton. On a visit to India in September, he discusses
the evolution of companies across the world and India's place in the new
world order with Rahul
Sachitanand.
Excerpts: You have had a chance to look at the way Indian companies think and function. What is your take on the current state of India Inc? I did have a chance to interact with a number of CEOs in Mumbai and I was struck by their keen interest in forming partnerships with China, bringing together the intellectual capital of India and the skilled labour capital of China. As this happens more, it is possible that a global force of tremendous power will emerge that will challenge the US and other countries. Western companies have looked at India as a place to ship low-end work due to the plentiful availability of cheap, well-trained work force. Barring the odd exception, entrepreneurship and contrarian thinking isn't what businesses here are known for. Is this perception changing? I don't know if this view is changing on a wide spread basis in the West, but I think it will have to in the future as more and more Indian start-ups become successful. With the flurry of entrepreneurial activity in India, I would think that many of these companies would find Indian entrepreneurs and the ideation they are generating in this country very attractive. I have worked with an Indian couple here in the US (the Bablas, based out of San Diego run a franchising business), they are bright, aggressive and creative, and they have built their businesses apparently without compromising their family values. From the outside looking in, it appears that companies such as Microsoft, Cisco and Oracle are not engaged in M&A activity just to gain market share, they are looking to acquire really cool people, businesses and ideas in really cool businesses, that (within a year or 18 months) are breaking through to success. The outsourcing market is seen as a huge market for Indian companies. What are the big opportunities for Indian companies? Human resource outsourcing has been big in the US for a long time. As more Indian companies jump into the customer service game and the market gets congested, HR outsourcing will represent a huge opportunity. The trend is already established in the US with companies such as Wyatt, Hewitt, Lee Hecht Harrison and Paychex. As knowledge grows and becomes more specialised, the next big thing could be moving from BPO to KPO or knowledge process outsourcing in areas such as para-legal services, nano and biotechnology services. KPO is projected to reach $17 billion (Rs 74,800 crore) globally by 2010, 75 per cent of which could get outsourced to India. Healthcare outsourcing may represent yet another opportunity for the future; you have some of the best physicians in the world, connectivity enables us to do more and more remotely. Also, with India's in-depth knowledge of alternative medicine, and alternative medicine being an explosive growth industry, it strikes me that there is another opportunity here for Indians to leverage What is the future of American companies if all the hands-on work is going to locations like India and China? Do they become hubs of marketing and ideation or is there some other metamorphosis they need to undergo? The US is going to have to figure out how
to deepen and broaden its base of intellectual capital, but it's also
important to understand that the costs for BPO and KPO services in India
will rise. As people in India enjoy a higher standard of living and better
quality of life it may not always be cost effective to come to India for
these services. The US must continue to focus on cultivating a business
culture that supports entrepreneurial activity. When jobs initially began
moving to places like India, the people who got fired were split into two
categories - the first complained bitterly about the move and the second
(more realistic) lot decided to head back to school and get re-trained for
this new marketplace. You have been closely associated with Southwest, a pioneer in its market. India' has its own version of Southwest in Air Deccan. Can the low-cost concept be replicated in a nascent market like India? As far as I can tell, flying in India is still for the elite. As low-cost carriers such as (Air) Deccan gain traction they will expand the market making it affordable for more and more people in India to fly. This will change the landscape of Indian business as entrepreneurs can cost effectively fly to put together deals, meet with clients, serve customers and grow their businesses. As the standard of living increases in India more people will be able to afford to fly, but make no mistake, Indian people are discerning and judicious, they will demand low prices without compromising on value.
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