Reverse Salient to impede India’s progress in IT

Reverse Salient to impede India’s progress in IT

IT’s happening

Post the opening of its markets several years ago, India has progressed from being an outsourcing destination with a business model primarily based on cheap labour to one based on intellectual arbitrage. Along with the burgeoning IT outsourcing market came the rapid strides of development in telecom, healthcare, education and manufacturing. Today, India isn’t just about cheap coders; it is an integral part of the global supply chains. While the IT Services sector has been expanding its footprints at a scorching pace, it has also caused a ripple effect of growth in other sectors as well leading to the emergence of a consumer class that is larger than the total population of US. The substantial investments pouring into the country towards various sectors reflect how bullish the world market is towards India.
Sustaining the growth
Milestone growth in FDI inflows during 2006-07. As of April-October, FDI flows touched $6.1 billion compared to $2.6 billion during the first eight months of the previous fiscal.The days have been bright hitherto. However, the unprecedented and unmatched growth seems to have overtaken India’s developmental process. India, as several reports suggests is bursting in its seams as issues pertaining to infrastructure and availability of quality human resources increase by the day. There was a time, in the distant past, when development took simple forms – tractors replacing bullock-carts, mobile phones reaching more people than land phones, cable television over satellite, e-mails gaining prominence etc. But development gets more complicated as it advances. The simple forms become more elaborate, and they begin to merge into ever more complex systems. Today, a lot of the developments undertaken form components of such large and complex systems, and its success can hinge as much on other components of the systems as on their own specific developmental qualities.Today, it has become imperative to not only understand the systems but develop foresight on how they're likely to evolve and how such an evolution can be leveraged to gain advantage.
Well, it is certainly difficult to develop foresight. However, the concept of “reverse salient,” can be effectively put to use to understand developments, the various components forming the developmental process, the larger ecosystem under which the development takes place and the repercussions of the ecosystem formation. The concept of “reverse salient,” is borrowed from military jargon, where it refers to a section of an advancing force that falls behind the front and hence slows the progress of the attack. All developments evolve in a similar fashion with advancement hampered by reverse salient that occurs in the developmental process, some components of it or in the larger ecosystem.

Losing Edge

The proliferation of tier II and tier III IT companies in India have resulted in IT Services/ offshoring getting commoditized. With cost undercutting prevalent, Tier I IT companies are required to play the game differently and in came the strategy of scale-game. Companies are now ramping up operations by thousands of employees per week. Is India game for this? Well, a sneak-peek at the attrition levels of Tier I players reflect that all’s not well. The reverse salient here is that in a scale game, knowledge inventorying is overlooked, which will cost the company dear. With intellectual capital forming an integral part of any IT services company, retention of employees is a necessity as it enables institutionalizing processes, skills and knowledge. Hence, until and unless a company has a robust employee retention strategy in place, it is better to refrain from scaling up. Why not play the specialist?
The total direct employment in the Indian IT-ITES sector is estimated to have grown by over a million, from 284,000 in FY 1999-2000 to a projected 1,287,000 in the current fiscal (2005-06)

In addition to the nearly 1.3 million-strong workforce employed directly in the industry, Indian IT-ITES is estimated to have helped create an additional 3 million job opportunities through indirect and induced employment. Indirect employment includes expenditure on vendors including telecom, power, construction, facility management, IT, transportation, catering and other services. Induced employment is driven by consumption expenditure of employees on food, clothing, utilities, recreation, health and other services.
There’s perhaps only one resource that can beat the rising oil price – an Indian engineering graduate. India produces about 3 million students from its universities each year. According to a survey by National Association of Software and Service Companies, about 25 percent of them are engineering graduates. The number seems to be not enough, at least in terms of quality. The available quality resources come at a premium and their wage increase is creating waves not just in India but across the world. Last year, according to the Global Salary Planning Report, Indian wages grew more than and other Asia-Pacific country - by 13.5%. In the IT sector wages grew by almost 20%.The advantage of cost arbitrage suddenly seems to be diminishing. Another case of reverse salient. Having witnessed enormous growth in outsourcing, shouldn’t the country have had a team ensuring seamless growth by building a robust IT ecosystem? The reverse salient here is not only unavailability of quality engineers but number of engineers to cater to the IT industry’s requirements. A report by Nasscom-McKinsey suggests that India could come up short in the global outsourcing industry by about 500,000 professionals before 2010.
With the IT outsourcing market increasingly getting commoditized, feverish campaigning is on with Indian IT majors harping on “India Moving Up the Value Chain.” This will imply the need for Indian companies to “innovate” and develop software products. Does India produce graduates who can work on innovative software products? The answer is no. Out of the 350,000 engineers spewed annually by various colleges, less than 25% are employable in IT services companies. Software product development requires intensive research, understanding of the market place and a mind that is tuned to continuous innovation and unfortunately Indian engineering graduates does not measure up to that challenge. The need to nurture talent that can innovate is the reverse salient here.

Intellectual Arbitrage

That’s the new mantra today, a transition from labour/cost arbitrage to Intellectual Arbitrage. The idea is to focus on the numerator part of businesses and not restrict offerings based on denominator. One needs to be capable to change the mindset of existing/prospective clients from “lower price” mentality to “better/efficient outcome at the same price.” Vertical knowledge coupled with horizontal know-how is essential to take such a proposition forward? Can Indians do it? Well, revisiting the reverse salients and ensuring proper investment to get rid of such salients could enable India to change the battle ground where Intellectual Arbitrage will be the decisive factor.

Shift from newspapers to TV

Deccan Herald in its edit page carried an insightful article on "The Fourth World" links. According to NRS 2006, the country's 230 million TV viewers (in 112 m TV homes) now exceed its 203.6 million newspaper readers, while the number of cinema-goers has declined from 51 million to 39 million a month. FM radio listeners now total 119 million. Indian language newspaper readership is fast growing, especially in the Hindi belt, while the comparable figure for English dailies has been stagnating around 21 million.

For me the figures reflect an unhealthy development. Why is TV viewership increasing? Does it reflect lack of investment of time in reading or is it the advancement of technology so much so that news is better viewed than read? Quite startling is the fact that readership of english dailies has been stagnating, which makes me even more skeptical about the declining reading habits.Worse, what happens when an increasing number of people shift to news on the move? Imagine the complexity of controlling messages being disseminated...

World Cup 2006

It has been over 2 weeks since Italy trounced France in the final of World Cup 2006, yet there is so much being written about it as if the greatest sporting event is still on. Well, every event will be remembered for something special. And, if there's anything negative, all the more better for it to be imprinted in ones mind. This world cup final will be remembered forever for Zizous head-butt. And, Zidane will go down memory lane as not only a great player but one who has a fiery temper. Like Mike TYson is remembered for chewing Foreman's ear...

Network Effect

The effect of "networking" is enormous.I have personally experienced the network effect through the modern communication tool - e-mail. What I have observed is that it is effective, participatory or intelligently interactive only if the topic is open and provides room for people to extend their expertise. "What should a company do to ensure effective re-branding?" The topic elicited abundance of thoughts that for a moment I thought the mail box would collapse. Remember, it's a one-line question which attracts response that gradually evolves into a 1 page document or more. HOwever, a 3 paragraph comment on "business model of IT companies" with 3-4 questions elicited limited response. The fact is that if one can initiate a topic that is simple and interesting, the attention it receives can be leveraged to plant "key messages" discretely to influence the participants. Imagine the power of planting "key messages" in a network run by the Harvard alumni. In the age of personal media, when consumers are increasingly becoming prosumers (producers and consumers), the need for PR professionals to devise intelligent campaigns that effectively influence the right audience is a challenge.

Elections sans PR strategy

The much awaited results are out. And, for a change the exit polls got it right. Yes, Karunanidhi, the 83 year old is at it, yet again. What is evident is that people are not really concerned about continuity, which will enable the State to undertake progressive measures effectively. Even more evident is the fact that the ministers aren't bothered about continuity. A sneak peek at the elections over the last couple of years will reflect 'election campaign' sans any direction or focus. What was the theme for AIADMK or DMK for this year? Except for competition bashing, there hasn't been anything concrete to take back for the citizens. With credibility hitting the trough, it has become imperative for the dravidian parties to first, establish credibility among the masses. And, in this light, portraying leadership and their track record should have been a priority. Secondly, conceptualizing a theme which is close to the masses and periodically seeding it within the masses, could be the next step. And, finally, reflecting upon the successes hitherto. The campaign has to have a professional approach, which has been conspicuously absent from the elections. The Jayalalitha government would have realized this by now and hopefully will chalk out a robust strategy to come back to power.

PR ploy in politics

"Nearly all men can stand adversity, but if you want to test a man's character, give him power," said Abraham Lincoln. We have winessed this in Indian politics, not once, but many times across various States. I can't recall any leader who had any inclination to genuinely serve the masses. The pre-election campaigning, laced with unbelievable and unachievable promises continues to reverberate in the constituencies gearing up for election. With unfullfilled manifestos glaring at wannabe leaders, the campaigning ought to be packaged differently. And yes, don't they do it in style. Let's revisit campaigning in Kerala. The UDF and LDF were running neck to neck in the race to the elections with infighting and pandemonium rocking both parties. A new twist was certainly required to gain prominence, in the media and in the minds of people. News about one of the most respected and the architect of LDF, the veteran V.S.Achuthanandan, being deprived of a ticket to election rocked the State. A clever ploy to gain significant mindshare and if the exit polls were to be believed, the strategy has paved way for the LDF.

Dance Bars' brand equity

The euphoria about legalising or shutting down dance bars has achieved one thing for sure - recognition for "dance bars." While the awareness was earlier restricted to Mumbaikars and frequent travellers to the commercial capital, the increasing number of print and electronic coverage has taken the concept of dance bars even to the conservative towns spanning India.The members at these bars who have been at the receiving end all this while will also be feeling elated remotely as their recognition would also go up to some extend. Well, am talking about the girls who would want to market/position themselves and leverage this opportunity. Many of these girls would go back to their respective home towns and get into some trade they know well. Obviously, the first priority would be to dance, where they can certainly command a premium as the "Mumbai Returned." And, even if they enter the oldest profession, the return will be a premium.

Came across an interesting report by Tanzeel Merchant,which reflects the risk-averse investment preference of Indians. Quite startling that only about 1.4 per cent of retail assets are in equities or related instruments. The average Indian invests the remaining 98.6 per cent of assets predominantly in fixed income instruments, life insurance, real estate, gold etc.While the fixed income assets yield only about 6% returns, the high returns possible through equities seems to have very few takers. Look at countries like Japan & US, Investors there have a significantly higher ratio of their assets invested in equities, either directly through the purchase of stocks and mutual funds, or indirectly through pension plans. Equities as an investment option are well accepted in these markets and their ownership widespread.A look at some of the companies by m-cap throws some interesting facts - the avg Indian owned very few shares.Be it TCS, Wipro, HLL, ITC or Reliance.

Can PR play a role here? Guess, the awareness levels amongst young Indians commanding high disposable income will have to significantly go up. Your thoughts...

Finally, the media seem to be turning in favour of PR. A meeting with the Bureau Chief of a leading business daily witnessed watershed events in the PR/media fraternity. In the Chief's words,"We have finally come to terms with this growing profession, PR."With competition looming large and pressure to produce breaking stories, relationship building seems to be the only way out for journalists. Yet another development noteworthy is the new initiative by leading US dailies to produce one news to the world. Yes, they are doing away with the hitherto strong strategy of creating separate content for print and online media. The challenge for PR pros is simply going to sky rocket what with the need to extend exclusive news for several journalists spanning diverse media platforms.

"PR is still in a nascent state." Well, when is it expected to mature? I've been hearing this for over 6 years now and given the rapid progress that the country is witnessing, one can be confident in pointing out the enormous contribution made by PR. Many PR practitioners still flay journalists, getting back the same from them. They belittle clients and the point of contact. Why does this repeatedly happen? I had the privilege of working with a veteran marketing wizard who once told me that,"you create what you think." I think, it holds true for PR as well. No, I don't think but it is indeed true. Indian PR practitioners try and target only one application, and that's invariably the media - print media, 99.9%. They (ideate, conceptualize) dissect client organization and it's departments for possible news stories getting 1-30 clips of print. Is it a one time effort? Do they broadly think of setting of a campaign. The answer is no. Most of the practitioners try and work out one month or one day PR solution - be it a launch or corporate results. There is absolutely no objective behind any exercises.

I think, practitioners of this trade will have to come out of the "media" coccoon and weave their networking strength to encompass "word of mouth" and new technology application. Consider the mobile phone, blogs, movies, matches,competitions etc. Can't PR play a role in reaching directly to the TA? As long as the practitioners depend solely on journalists, they'll continue to receive brickbats.

Quite intriguing! can money entice journalists to pen down reports that will transform their own nation into pits? Well, it certainly seems so going by the recent events that shook America. One of the prominent newspapers there has reported US govt funding a PR agency to plant favourtable reports in Iraqi newspapers. The PR agency reportedly paid journalists to write about US funding and rebuilding initiatives in the country. If money can buy anything,PR can create anything.