India says US protectionism is regressive

[mike05]

Quality may or may not be sacrificed. And more often than not its the latter because of problems like communication and the distance barrier. But there's always a relative level to quality. Companies have an idea of the quality that they can afford to drop without pissing off their customers. There is always a minimum acceptable limit.

You are so wrong there! You think names like GE, IBM, HP, Texas Inst. etc have been top of the Fortune and Forbes charts for 30-50 years by just concentrating on costs? These names have mastered the long-term game. If to them the customer was less important than the profit, they wouldnt have lasted as long as they did. They earn profit because their stuff sells, and their stuff sells due to a happy customer. DO you think they don't know that?

I'm going to give you some examples from what I know personally about outsourcing.

My previous role was dealing with outsourcing for finance companies where we would take roles from countries and move it to India and from my experience in the banking operations quality always gets compromised. Usually its worse in the initial stage until things stabilize but we found out then as the leads & analyst got better in their roles the management would move them to new accounts belonging to our competitor (so as to kick their start their operations and move it to a mature stage for full sign off). And this cycle perpetuates itself but the given the cost savings my management was willing to overlook this. From my view I see this a compromise in quality as a whole because the work is not one to one would it have been had it been done onshore but like I said given the salary and the management structure of doing things its something we have to be realistic about.

As for customer satisfaction which is funnier because of the above and also some really pissed off clients we developed a list of client who we cannot afford to piss off and ones that we could piss off and started to service the ones we could not piss off ourselves (essentially bringing the work back onshore). So yes service for our lower ranking clients was compromised but deemed acceptable but the management.

And tell me something, you are a customer yourself, would you buy a product a second time if you're unhappy with the service or the customer support? Will HP be able to sell its Data Warehousing system year after year if its customers were not happy with the post-sales and maintenance support tasks? Dont underestimate the corporate customer or for that matter, any customer. They want value for money, but not at the cost of quality.

I can tell you why I still support cost as the driving factor, most of the biggest IT customers for HP Dell etc are banks and typically the top level management that makes the decision on purchase of goods are not the ones that deal with these issues. IT departments in the banks have very tight budgets as they are not a profit center but a cost center and they always looks at the bottom line. The ones that deal or notices issues like the ones you mentioned are usually much lower level people who have little impact on the decision making. So long as the IT equipment doesn't suffer a massive malfunction (which is the most important of course) even if the service level dropped by 10% or 20% the corporate customers will still go for it because its the cost that matters and thats what the shareholders look at.

Btw mate I am not putting down off shoring in case you think I am but I'm just trying to inject some realism here it aint all roses.

 

[RobbieS]

I'm going to give you some examples from what I know personally about outsourcing.

My previous role was dealing with outsourcing for finance companies where we would take roles from countries and move it to India and from my experience in the banking operations quality always gets compromised. Usually its worse in the initial stage until things stabilize but we found out then as the leads & analyst got better in their roles the management would move them to new accounts belonging to our competitor (so as to kick their start their operations and move it to a mature stage for full sign off). And this cycle perpetuates itself but the given the cost savings my management was willing to overlook this. From my view I see this a compromise in quality as a whole because the work is not one to one would it have been had it been done onshore but like I said given the salary and the management structure of doing things its something we have to be realistic about.

As for customer satisfaction which is funnier because of the above and also some really pissed off clients we developed a list of client who we cannot afford to piss off and ones that we could piss off and started to service the ones we could not piss off ourselves (essentially bringing the work back onshore). So yes service for our lower ranking clients was compromised but deemed acceptable but the management.

Mike, first of all, let me say its pleasure to have this discussion with an intelligent and IT acquainted guy like you. One hardly find the sort on a defense forum.

Now, the issue you talk about is real and does happen a lot. Re-allocation of resources or more precisely replacing senior, experienced resources with cheaper ones is a very prevalent practice. But I dont think this is exclusive to Indian outsourcing. My ex-B school classmate in a Big 4 consulting firm in US tells me that they promise their clients 100 man-hours of a Partner level guy and as soon as the ball gets rolling they replace the partner with a Snr. Consultant or even lower. Saves the consulting firm money as they charge the client for a Partner level guy but actually use a Consultant. So this is a rather usual business practice.

I can tell you why I still support cost as the driving factor, most of the biggest IT customers for HP Dell etc are banks and typically the top level management that makes the decision on purchase of goods are not the ones that deal with these issues. IT departments in the banks have very tight budgets as they are not a profit center but a cost center and they always looks at the bottom line. The ones that deal or notices issues like the ones you mentioned are usually much lower level people who have little impact on the decision making. So long as the IT equipment doesn't suffer a massive malfunction (which is the most important of course) even if the service level dropped by 10% or 20% the corporate customers will still go for it because its the cost that matters and thats what the shareholders look at.

You are right most of these dept. are cost centers. SAP I believe is another system/software that is very much in need by many of these FIs and TCS and their likes are making a killing by getting their Analysts SAP certified and then selling 'em as experts.

But again, there's a relative level of quality that they are willing to compromise on. Many companies are also outsourcing their accounts and legal activities. Activities that need good amount of quality. LPO like KPO and BPO is another buzz-word in India.

Btw mate I am not putting down off shoring in case you think I am but I'm just trying to inject some realism here it aint all roses.

It definitely aint all roses, I agree. Most companies untill get to a significant level play on costs. But once they achieve a critical mass and want to get repeat customers, they focus on quality issues as well.

 

[Swift]

Tell me guys if Indian companies re doing bad job then why some of US bases MNC's are creating those campuses in India.

Quality of manpower is bad in India ? you guys must be joking .. Why IBM has hired more than 100000 employees in India. why Intel and Microsoft have captive centers in India. They surely dont know **** abut quality isnt it.

 

[fallstuff]

This is no US protectionism. Its a State level activity. It is also outside of Uniform Commercial Code unless someone can show to the contrary.

 

[mike05]

Mike, first of all, let me say its pleasure to have this discussion with an intelligent and IT acquainted guy like you. One hardly find the sort on a defense forum.

Thanks for the compliments mate but I can't say I am without my nose growing long lol, lets say I got an opportunity and seized it but it was a enriching experience nevertheless and I still keep in contact with many of my previous colleagues from Hyd who I had a real pleasure of working with.

Now, the issue you talk about is real and does happen a lot. Re-allocation of resources or more precisely replacing senior, experienced resources with cheaper ones is a very prevalent practice. But I dont think this is exclusive to Indian outsourcing. My ex-B school classmate in a Big 4 consulting firm in US tells me that they promise their clients 100 man-hours of a Partner level guy and as soon as the ball gets rolling they replace the partner with a Snr. Consultant or even lower. Saves the consulting firm money as they charge the client for a Partner level guy but actually use a Consultant. So this is a rather usual business practice.

Agreed I think we just have to be realistic about how the outsourcing firms wants to runs the business. Typically I don't discourage this but the firm has to ensure proper handover to the new guy, but the management is handling this much better now more on this below

You are right most of these dept. are cost centers. SAP I believe is another system/software that is very much in need by many of these FIs and TCS and their likes are making a killing by getting their Analysts SAP certified and then selling 'em as experts.

But again, there's a relative level of quality that they are willing to compromise on. Many companies are also outsourcing their accounts and legal activities. Activities that need good amount of quality. LPO like KPO and BPO is another buzz-word in India.


It definitely aint all roses, I agree. Most companies untill get to a significant level play on costs. But once they achieve a critical mass and want to get repeat customers, they focus on quality issues as well.

Actually BPO what was I more focused on at the time. I think in the IT space quality is much more controlled because the people are formed into team and typically these teams do not change until the project sprint is finished so there is a clear objective which is met. Unfortunately for BPO type services the person usually gets better with experience and the vendors at the time (I believe) were applying KPO type management methodology which was why had many issues ion the beginning. But then again we were also the first bank to do BPO with them and as you mentioned the work quality management is much better now with the managers not changing the key people around as much or least ensuring proper hand overs before allowing the person to move to another account.

On the topic of the US government holding back on the Visa's, I think this is something the world will have to get used to when dealing with US politics. There is always a lack of control on the governments part to deal with issues early on and then implement drastic measures to try and solve the problem.

If the government realized that a lot of jobs were being lost they should have implemented small steps to control the situation thus keeping the public happy but still be open to outsourcing or adjust the tax brackets of the fat cats making extra profit. Instead they decided to keep wall street happy and enjoy more funding for their next election campaign. Typically American

 

[somebozo]

Outsourcing worshipper should know that fortune 500 companies have plently of pissed off customers and counting more. My personal list would be Siemens, IBM, Symantec and even DELL. But they dont care because many few purchasers over look the benefit of good services and many contracts are decided on sole basis of cost.

For my work I have to deal with the above and I would rank IBM the worst. Their reps have brains smaller than pea and tele-prompters bigger than whiteboards. Symantec used to be OK until now but from last month they have outsourced enterprise support to somewhere in India which takes weeks to reply emails. DELL rules the day for "sell and run" like policies. Intially our design requirements sent to Siemens Automation were dealt in Turkey but now their their technical consultation department has moved to India other than few communication delays its going fine.

SO there is no business in the world with 100% customer satisfaction rating. Outsourcing or no outsourcing is not the question. Quality costs and there is no cheap way out.

 

[Swift]

Outsourcing worshipper should know that fortune 500 companies have plently of pissed off customers and counting more. My personal list would be Siemens, IBM, Symantec and even DELL. But they dont care because many few purchasers over look the benefit of good services and many contracts are decided on sole basis of cost.

For my work I have to deal with the above and I would rank IBM the worst. Their reps have brains smaller than pea and tele-prompters bigger than whiteboards. Symantec used to be OK until now but from last month they have outsourced enterprise support to somewhere in India which takes weeks to reply emails. DELL rules the day for "sell and run" like policies. Intially our design requirements sent to Siemens Automation were dealt in Turkey but now their their technical consultation department has moved to India other than few communication delays its going fine.

SO there is no business in the world with 100% customer satisfaction rating. Outsourcing or no outsourcing is not the question. Quality costs and there is no cheap way out.

Tell me one thing. did IBM realize this suddenly after hiring 10th of a million or they realized gradually?

 

[Swift]

Some of these tom dick and harry's on internet forums think they have even better brains that ppl heading IBM, Microsoft and Intel.

 

[Tang0]

Indian R&D, and tele-suport can do a decent job at 1/4 the cost of hiring domestic US workers. They can probably do almost the exact same level of quality at half the cost, barring the occasional accent problem or cultural misunderstanding. This comes directly from purchasing power parity of the dollar in the relative locations. A Wal-Mart worker in the US makes a solid 13-14,000$, or 6-650,000 Rs. In India, that is about 10X what similar work would run, and actually a solid middle class wage. I could get away with paying a low-end IT professional in India that much easily.

These are simply the realities of the situation as they exist today. If I am thinking in terms of maximizing Share-Holder profit, there is no good reason not to move my manufacturing centers to China and my support centers to India.

That however is not the issue.

Everyone here is looking at it from the wrong angle. It is not the job of the US president/congress to maximize shareholder profits. Their job is to see to the welfare of the maximum number of US citizens, regardless of position, and defend the constitution of the US.

Fact 1: From 1945 to 1990, less than 10% of US GDP was the result of foreign trade of any sort.
Fact 2: US real wages and quality of life have remained stagnant since the late 70's, despite increasing trade (Now comprises over 24% of US GDP), increasing technology, and very little population growth.
Fact 3: The US manufacturing industry is a shadow of it's former self, comprising only 13% of the total economy, shrinking by 2/3 since the seventies.

Correlation 1: The US is(Was at least) capable of being almost completly self sufficient.
Correlation 2: The increase in trade and outsourcing was deleterious, or at the very least a wash, for US citizens as a whole.

Deduction: Unrestricted free trade is not inherently beneficial for the most developed global power.

Do I make the logic clear? Now, you can attack that logic as you wish, and it is not a forgone conclusion, but it is not an inherently erroneous one.

 

[Tang0]

The Indian ministers position is based on the History of India, not that of the US. The US has no examples of protectionist policies worsening a depression or recession because it has never happened before. Most attempts at US protectionism have been cut down by US special interests, and the fact that it really does not jive with the free trade principles on which the country was founded.

India's past market protectionism was short sighted, since India was so poor at the time that they would almost inherently be the greatest beneficiary in just about any finical/economic transaction. In fact in retrospect it seems kinda silly. Sure, the west might have cheated Indian businesses by western standards, but by Indian standards that was making a killing...

 

[mike05]

Everyone here is looking at it from the wrong angle. It is not the job of the US president/congress to maximize shareholder profits. Their job is to see to the welfare of the maximum number of US citizens, regardless of position, and defend the constitution of the US.

To be honest I don't believe this is actually happening, unfortunately I do not have any examples to quote here but its known that the healthcare and welfare of the lowest employees in Wal Mart are actually quite appalling and that actually goes along with most other blue collared workers in fast food chains etc. I feel that if the government really cared they would have stepped in sometime ago already.

Fact 1: From 1945 to 1990, less than 10% of US GDP was the result of foreign trade of any sort.
Fact 2: US real wages and quality of life have remained stagnant since the late 70's, despite increasing trade (Now comprises over 24% of US GDP), increasing technology, and very little population growth.
Fact 3: The US manufacturing industry is a shadow of it's former self, comprising only 13% of the total economy, shrinking by 2/3 since the seventies.

Correlation 1: The US is(Was at least) capable of being almost completly self sufficient.
Correlation 2: The increase in trade and outsourcing was deleterious, or at the very least a wash, for US citizens as a whole.

Deduction: Unrestricted free trade is not inherently beneficial for the most developed global power.

Do I make the logic clear? Now, you can attack that logic as you wish, and it is not a forgone conclusion, but it is not an inherently erroneous one.

No disagreement there, I too support that unrestricted free trade is bad thing for the developed country which is why the government should have recognized and planned for some control in stages.

Unfortunately short term greed for economic success probably went into their head and resulted in the situation today where almost all of US manufacturing capability is either in China or South America and they are now trying to move some back to create jobs (same goes for outsourcing). The government must have thought that allowing people to sit at home and trade properties to make a living was a good thing, obviously they didn't see the sub-prime coming.

 

[RobbieS]

Agreed I think we just have to be realistic about how the outsourcing firms wants to runs the business. Typically I don't discourage this but the firm has to ensure proper handover to the new guy, but the management is handling this much better now more on this below


Actually BPO what was I more focused on at the time. I think in the IT space quality is much more controlled because the people are formed into team and typically these teams do not change until the project sprint is finished so there is a clear objective which is met. Unfortunately for BPO type services the person usually gets better with experience and the vendors at the time (I believe) were applying KPO type management methodology which was why had many issues ion the beginning. But then again we were also the first bank to do BPO with them and as you mentioned the work quality management is much better now with the managers not changing the key people around as much or least ensuring proper hand overs before allowing the person to move to another account.

On the topic of the US government holding back on the Visa's, I think this is something the world will have to get used to when dealing with US politics. There is always a lack of control on the governments part to deal with issues early on and then implement drastic measures to try and solve the problem.

If the government realized that a lot of jobs were being lost they should have implemented small steps to control the situation thus keeping the public happy but still be open to outsourcing or adjust the tax brackets of the fat cats making extra profit. Instead they decided to keep wall street happy and enjoy more funding for their next election campaign. Typically American

I still think this is hogwash. US companies will find out ways to get around these regulation. Simply because they have to survive. Their profit oriented vision trains them for finding ways around such regulations.

I spent some time in Milwaukee as a GE employee (I was actually employed in their captive in Delhi) and I remember the kind of looks I got from White folks on the bus that I took to the office. I had a solid inkling that the driver would one day drive off just as soon as I was about to get off, trampling me under the tyres. But the point I am trying to make is that public opinion wasnt pro-outsourcing then. But GE still continued with its policies. And so did a lot many others.

 

[nForce]

Outsourcing ban won't affect ties: White House tech chief​

NEW DELHI: A move by the American Ohio state to ban outsourcing projects to emerging markets like India and the shrill political rhetoric in the US on the subject ahead of the November Congressional polls will have no impact on the ties between the two countries, president Barack obama's chief technology officer said here Tuesday.

"In a democracy you will have voices that say things here and there. But you must look to the core. What is actually happening on the ground ... and in that area there is nothing but growth," said Aneesh Chopra, the White House chief technology officer, when asked about the Ohio state's bill to ban outsourcing of its IT projects and similar actions being mulled by others.

"I am confident these issues will be resolved because good people will sit around the table and think them through," Chopra told reporters on the sidelines of a CII conference.

The Ohio state government's action and President Obama's increasing pitch against outsourcing has created anxiety in Indian IT circles.

Obama last week said his administration will offer tax benefits only to firms that create jobs in the country, a move that may hit Indian IT firms in a big way.

The move was criticised by Commerce Minister Anand Sharma, among others, who termed the action as "regressive" and warned that protectionist tendencies would deepen recession.

Chopra, who is leading a high-level technology delegation and met government functionaries including the Unique Identity Authority Chairman Nandan Nilekani, said Obama's comments were being mis-read.

"I don't believe that it is a accurate reflection of the President's comments," said Chopra.

"Government investments in technology are modest in the scale of the overall economy. Maybe its an important thing to understand for everybody. The United States economy is very much market based, so whether a government chooses to do X or Y in its particular requirements, these are modest," he added.

According to India's apex IT body, Nasscom, the move was influenced by the November elections to the US Congress and Ohio governorship drawing closer. Nasscom president Som Mittal said more such electoral rhetoric could be expected in the next few months.

Chopra, however, hoped that the whole outsourcing issue would be resolved in a quick and mutually beneficial manner.

"Nobody is wrong, nobody is right. You sit down and think it through and each side needs to have their voice heard. Then you make progress. I am confident that this is the way it will be approached," said Chopra.

Sam Pitroda, chairman of the National Innovation Council, who was also present at the seminar on innovation exchange between India and the US, said: "The commerce minister and other functionaries know what to do. We have to support it."

But Pitroda said too much was being made out of the whole outsourcing ban controversy.

"You can't be hung up on one order cancelled. I mean it hurts someone whose order got cancelled, but as a nation you got to look beyond. Our key challenge is to go up the value chain," said Pitroda, who is also advisor to the Prime Minister on public information infrastructure.

Source

 

[fallstuff]

This is a local initiative by the State of Ohio. I don't see it gaining any national momentum. Business lobbyist will not let it happen.

 

[nForce]

This is a local initiative by the State of Ohio. I don't see it gaining any national momentum. Business lobbyist will not let it happen.

Agree with you..

So is said by the post...

A move by the American Ohio state to ban outsourcing projects to emerging markets like India and the shrill political rhetoric in the US on the subject ahead of the November Congressional polls will have no impact on the ties between the two countries, president Barack obama's chief technology officer said here Tuesday.

But,I think time has come to be cautious.It is better to be safe than sorry.