Why NRIs won't offshore to India

 

ECONOMICTIMES
MAY 04, 2004 12:10:16 AM ]

Even as more and more US companies rush to take advantage of India's ample supply of cheap yet highly trained workers, some of the most motivated US companies - ones set up or run by executives born and trained in India - are concluding that outsourcing to India is not very cost-effective.

Often many entrepreneurs choose outsourcing partners (service provider) without matching their needs with the partner’s capabilities. The result: India's high-technology workforce is not always as effective as advertised.

And this is not mere anti-India rhetoric on election eve in the US. As New York Times’ Eduardo Porter (http://www.kansas.com/mld/eagle/business/8568645.html) quotes Hemant Kurande, the CTO of Massachussets-based Storability Software, who tried all kinds of models for making outsourcing to India work. But nothing worked out. So, in the end he had to bring back work to the US at four times the cost. According to him, Indian programmers lacked "depth of knowledge in the area we want to build software.”

Another company, ConnecTerra, a Cambridge, Massachussets-based company that designs software to manage data from electronic devices such as new radar-based ID tags tried programmers in India last year. But ConnecTerra, gave up on outsourcing because the Indian firm that it worked with couldn't deal with the fast-changing requirements.

Apparently, only certain kinds of tasks can be outsourced, those which require more creativity are difficult to manage at a distance, say industry experts.

Thus the US-based Indian entrepreneurs, people with cultural affinity and local connections in India, who could be expected to make offshore partnerships work, are the ones who are turning away from them.

These Indian entrepreneurs in this country do not fault the work ethic of the programmers in India.

Thus, it is certain that cost advantage does not always justify the effort as the geographic distance and differences in business contexts can be difficult to bridge.

According to experts, programmers in India cost $3,500 a month as compared to a monthly salary of $10,000 for programmers in the United States. But that is not all. Even though the cost-savings in India were three to one, the difference in productivity was six to one.

So after all this, what do we say? Do the Indian-trained workers lack creative ability? Well, when outsourcing fails, it is simply because "less disciplined" businesses try to farm out projects that are not properly defined at. And this proves the whole point. Offshore not all kinds of services can be outsourced and one should weigh the pros and cons before getting into it.

Here, no one can question the dedication of Indian programmers. Not only do they work hard, but they are also skilled. However, outsourcing fails when less disciplined" businesses try to farm out projects that are not properly defined