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Posts tagged “Blue Chip

A giant leap of success


India has come a far way of from just plain call centres. Half the world thinks of India being a call centre hub because of its cheap labour well go ahead and say that cause its true but theres more to it. Its similar in the past when called India as the land of snake charmers. Even two decades after the Indian technology miracle began it is hard not to be impressed by the scale of the achievement.

 

Indian IT has made shareholders and employees rich and now boosts the country’s balance of payments by $59 billion a year. Yet its impact goes far beyond the numbers. The big firms were among the first to win blue-chip American and European clients and to adopt blue-chip governance and accounting norms themselves. This won acclaim from foreign investors.

I hope this changes the perception of India being a third world country.

In the grand scheme of things  companies like Infosys, Wipro, TCS ’ performance is still strong, with sales growth and margins which are, by global standards, impressive. Although many Western multinationals initially slashed their budgets in response to the financial crisis, they quickly performed a U-turn and increased spending, as they redoubled their efforts to redesign and outsource key parts of their businesses. BUt even though there is strong link up between the Sales growth and Employee and Indian IT companies are desperate to escape their tag as “body shops” whose main competitive advantage is low labour costs. But i still think of it as an advantage.

This is straight from “The Economist”

The cost arbitrage available by employing Indian engineers rather than Western ones is still at least 50%. The strategic worry probably reflects three things, though. First, large Western rivals have come a long way in replicating some of the advantages of Indian firms. Wipro’s Mr Senapaty says that for many years they dismissed the Indian model as a temporary phenomenon boosted by the dotcom bubble and the Y2K scare: “It was only in 2003 and 2004 that they realised the Indian model would survive.” Now firms such as IBM and Accenture have vast employee bases in India too, and although they still struggle to grow as consistently or as profitably as Indian firms, they can compete better.

Wages for employees in India are rising at over 10% this year, and as the economy develops there will be more competition for talent from other industries. There is a need is to improve the supply, and the quality, of graduates cause the dark side is that only about a quarter of job applicants are typically considered employable – but i’m sure that would not take long.

But in time India’s IT firms will surely invent new products and markets. After all, they are past masters of taking something that only exists in their imaginations and turning it into a multi billion dollar reality.