Posted on 01/24/2007 6:20:38 AM PST by Ernest_at_the_Beach
By Steve Schifferes
When 13-year old Taylor, who lives in Modesto, California, wants help with her homework, she no longer goes and asks her mother for help. Instead she goes to her computer and gets on the internet, where she dials up an e-tutoring service, TutorVista, based in Bangalore, India, for help with her maths and English.
"My daughter is literally at the top of every single one of her classes and she has never done that before," says her single-parent mother, Denise Robison. Denise pays $2.50(£1.26) per hour for the service, a fraction of the $40 per hour charged by US online tutoring services or the $100 an hour charged for face-to-face tutoring. The Internet IT services revolution Denise's experience is just one small example of the IT services revolution that is sweeping the world of business, and is changing the face of India. In the past, economists thought that only goods could be traded across borders, while most services could not be imported and therefore were not subject to the same pressures from international competition.
But the internet has changed all that, and now the fastest-growing portion of international trade is trade in services. And it is big companies, not private individuals, who are making the most of the lower cost of many internationally traded services.
They have found that it is cheaper to outsource many white collar tasks - such as accounting, IT support, and payrolls - to locations overseas.
The global leader in the provision of these services, known as business process outsourcing (BPO), is India, which exports $25bn per year worth of these services, a figure that is expected to rise to $60bn by 2010. Advantage India
There are many reasons why India has become the centre of the global IT services industry.
We believe that India is the hub for the world where the ICT sector is concerned
It has a highly educated workforce, with two million college graduates a year, all of whom speak English. It has excellent international data communications links, and good internet access in the major cities.
And the wages of its professional IT workers average one-quarter to one-tenth of the wages of equivalent posts in Europe or US.
But the Indian IT services industry only began to develop when the government opened the country to the forces of globalisation, ending regulation at home and lowering barriers to foreign investment, in the early 1990s. The government deliberately targeted the export-oriented IT services sector for growth, giving it special subsidies.
Multinationals rush in
Foreign multinationals flooded into India, eager to take advantage of the cheap professional labour and the opening up of one of the world's biggest markets.
The first US multinational company to enter India was Texas Instruments, back in 1988. At first they faced considerable obstacles in getting data sent back to their head office in the US. The Indian Ministry of Communications refused to allow them to set up their own private satellite dish unless a government official was present in the control room of the company's satellite data transmission centre at all times, according to the company's first Indian managing director, Srini Rajam.
But within a decade all such barriers were swept aside, as the cost of data transmission plunged due to the creation of trans-oceanic fibre optical cable networks. Now more than 500 major international companies have IT operations in Bangalore alone. Among the household names are Hewlett-Packard, Dell, IBM, and Accenture. A faster chip
For Intel's John McClure, the company has no choice but to be India.
Intel's Indian development centre played a key role in the company's strategy to develop new chips for computers which will be compatible with Microsoft's new Vista operating system, which will begin rolling out in January.
Mr McClure told the BBC that Intel's new R&D centre ramped up quickly in order to lead in designing Intel's new dual core Centrino chip for laptops.
Microsoft itself has established one of its three global fundamental research centres in Bangalore - the other two are in China and at Microsoft's HQ in the US.
The fact that so many hi-tech companies have located in India can bring broader advantages.
"The IT sector has a definite potential for contributing to broad-based growth and broader economic objectives," says Professor Nirvikar Singh, University of California, Santa Cruz.
World hub It is clear that it is no longer cheap labour that is attracting these companies. In December, Cisco Systems, announced a $1.1bn investment in Bangalore, creating 6,000 jobs. It will be run by its new chief globalisation officer, Wim Elfrink.
Companies like Cisco see being in India as vital to spotting the next generation of products and services that the company should be making. "We believe that India is the hub for the world where the ICT sector is concerned," said Mr Elfrink. |
Globalisation shakes the world
fyi
I've worked in IT for almost twenty years now, and in the beginning, "outsourcing" simply meant that we'd send a few tapes air-freight to somewhere in India, the Indian codeslaves would do some stuff to it, and then they'd send tapes back to us a week later and we'd start testing them. This was only 10 years ago (1997).
Nowadays, I work for a company whose motto seems to be "if it isn't nailed down, outsource it--and if it is nailed down, yank the nails up, THEN outsource it." When I was between contracts, my primary recruiting contact was in India. My previous business unit's payroll and timesheet help desk was in India. More and more functions are being outsourced to India, and not just IT-related and help desk stuff, either. Things like payroll, accounting, records, engineering--stuff that just a few years ago was thought to be "outsource-proof."
And that's not even counting the thousands and thousands of Indian workers that come here on visa to work on projects. The place of "native Americans" (for lack of a better term) in IT now seems to be veering away from coding and more toward project management, quality assurance, designing, business analysis--the functions that still require face-to-face interaction with users in the United States. Anything else, any function that just requires somebody to sit at a cube and work at a terminal or PC? Well, Pankaj can do it as well as you can, and for 1/5 the money.
For anybody in the US wanting to go into information technology today, my recommendation is this: WORK ON YOUR ENGLISH SKILLS. Seriously. The only advantage you will have over foreign workers in this industry is your ability to communicate. And that counts for more than you'd think. In addition to keeping abreast of the latest tech advances, make sure you can communicate clearly, both speaking and writing.
}:-)4
Not that you can't get quality service from India, but there is sometimes an accent problem and phone line quality problem, and it's not America. They don't know where your town is and they won't comment on sports teams or weather, because they don't know that much about what's going on in America, and there is no "connection" like having a local person to talk to, someone that leads the same life as the customers and can relate to their issues.
BTW, in the top of the article above it mentions students getting tutoring in English homework from India. Ha ha, let me know how that turns out.
Exactly. I worked with zillions of Indian contractors at my previous worksite, and almost to a man, they were smart, motivated, friendly, and skilled--many of them with advanced degrees and downright brilliant, doing work that was actually underutilizing them. But, I got picked to do many things interfacing with our users (such as status reporting or training) because my English skills were better. I'm no English major, but I do reasonably well getting my point across.
You may not need communication skills for your first few years out of college in IT, but now those grunt-level coding and helpdesk jobs are going overseas and may never come back. The IT jobs that are staying here require good communication skills and good business knowledge in addition to good technical skills. Pradesh can slam out some code as fast as Suzie can, but even with Pradesh's excellent IIT education, Suzie can probably document it better...of course, assuming she wasn't a Womyn's Studies major at UC-Berkeley or some other such useless thing.
}:-)4
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.