India outpost of West Coast bastion

Plenty of ink has been spilt on the Prime Minister’s recent visit to California where he received a resounding reception from people of Indian origin and from executives at the helm of some of the world’s premier technology companies.  This trip bodes well for India, especially if the bold statements of intent get translated — even in part — into executed action.

As an outsourcing adviser, I have seen India surfing the offshoring wave and indeed riding its crest, but Indian IT is now in danger of being caught in the wake of the same wave as it begins to crash.  When interviewed by the BBC about a decade ago, I was asked whether I felt that India’s IT boom was in danger of being overshadowed by the rise of China’s software industry. 

I maintained at that point that India’s offshore “labor arbitrage” advantage wasn’t really at risk from China, simply because India’s demographic advantage wasn’t about to erode; its population is much younger, on average, than China’s.  I did however, say that the offshore phenomenon was but a mezzanine step — since it was cheaper, at the time — to make use of labor arbitrage for repetitive tasks than to automate or mechanise them. 

The mezzanine landing that Indian IT has occupied is now in danger of passing — the costs of automation and mechanisation of repetitive tasks have come down to the point where it is now cheaper to automate an IT infrastructure management or BPO task than it is to offshore it.  Indian IT services bellwethers are already issuing warnings about declining revenue streams — and about the fact that they expect to employ far less people in the years to come.

The future of technology lies in the ideas that arise out of the crucibles of Silicon Valley and the Pacific Northwest — where indeed the automation juggernaut which now threatens IT and BPO services offshoring was first nurtured. 

If the firms that are at the forefront of new digital technologies — such as analytics, and in embedding the internet into manufactured items (‘things’) that are commonplace — realise that they can tap into India’s vast store of software talent in order to develop and launch these new ideas, a second Indian software revolution will take place — this time around creating the future, rather than in the typical ‘your mess for less’ attitude seen among firms who rely on labor arbitrage as their sole selling point.

About 15 years ago, when the US toughened its visa regime and started making it difficult for Indian engineers to emigrate to (or even just work for a few years in) America, Bill Gates is famously supposed to have told the US government that he wouldn’t hesitate to move Microsoft’s headquarters to Bengaluru from Redmond. 

The US government took note of this (albeit many years later) and has now smoothed the path for Science, Technology, Engineering and Mathematics specialists to move to and work in America.  This contributed to Indian brains moving in droves to the West Coast - a fact alluded to by the Prime Minister in his recent speech there.

The trick lies in getting the West Coast’s technology leaders to realise that the IT talent on hand in India can easily be repurposed into a powerful tool for new technology and software product development, rather than just as a way of bringing down the costs of managing or implementing large software or hardware built by others. 

This means that a product development mindset has to be engendered among our IT professionals and that they have to get into the business trying to anticipate what customers want and need long before the need actually becomes patent.  This is a simple shift, but is by no means easy to implement.

In practice, it is the equivalent of a skilled mason or a repairman being asked to take the place of a structural engineer or an architect. 

Both classes of people work with materials and with measurements, but the latter class understands the larger impact of material usage, and the aesthetics of how measurements actually look when the task of implementing a plan is complete. This shift has already taken place in the engineering services industry — many manufacturers have already moved large pieces of their product design to India - but hasn’t yet taken hold in the ‘manufacturing’ of new software.  

The bastion of innovation still stands tall on the West Coast of America. If the people who built - and guard — that bastion with the help of the ‘in-situ’ work of Indian, Chinese, Russian Polish, American and other software engineers on the West Coast realise and accept that they can build an outpost of that bastion in India, Indian IT would be transformed. 

This transformation will save Indian jobs - and create even more employment in the Indian IT sector.  The main employers will end up being software product firms - instead of software services firms.

I would like to think that the Prime Minister’s recent visit will indeed turn out to be a watershed event, and that this strong statement of intent and purpose both from the Indian government and from software product firms such as Microsoft and Google will eventually turn into action.  If it does, then the lakhs of IT graduates that this country produces annually will still have avenues for employment in their chosen field - and will not have to look for alternate employment in other sectors of the Indian economy, where they will be under equipped to perform at their maximum potential.  

The Prime Minister’s trip to the West Coast could not have come at a better time.

(The writer is a renowned expert on the IT industry, especially in IT services outsourcing. He has led some of the largest and most innovative transactions ever completed in global sourcing, some of them still considered watershed events in the evolution of the industry. He has personally advised on over US$ 20 billion in outsourcing transactions)