In The Spotlight

Outsourcing Destinations – coming soon ! 

Financial Express Article, 25/10/2010, Ganesh Natarajan

Speaking at the recent MENA ICT Summit in Amman, Jordan in early October, it was heart warming to witness the rapt attention with which the Government, the fledgling IT and Business Process industry and even members of Royalty listened to the story of cities like Pune and the paths they have chosen to build a revenue of over six billion dollars in exports from humble beginnings of a few hundred million dollars at the turn of the millennium. The focus on high quality education and industry oriented skills development, the development of a domestic industry with both Government and Private sector embracing contemporary IT solutions for improving factor productivity and the ability to promote the destination to global and local industry leaders – all this and more will probably be absorbed and implemented by Amman and Irbit in Jordan and indeed in over a hundred Bangalore wannabe cities all over the world in the near term to emerge as competitors for Indian prowess !

That does of course beg the question – is it competition or collaboration? With the threat of protectionism looming large all over the world and the very real opportunity of inclusiveness that a global delivery model provides, it may be wise for all significant Indian firms to consider near shore outsourcing centres in Latin America, Central or Eastern Europe, Middle East and China, connected by technology so that work can be distributed and delivered across multiple locations in a seamless and cost effective manner – surely the model of the future! To enable this, Indian firms too need to demonstrate the commitment to work with the Governments of Mexico, Chile, Brazil, Poland, Hungary, the Czech Republic, Egypt, Jordan and China to launch a collaborative effort in chosen cities in these and maybe a dozen more countries!

For the cities themselves and that includes a score or more aspiring locations in India and the neighbouring SAARC countries as well, a realisation needs to dawn that there is more to building an outsourcing destination than pouring tons of concrete and steel into IT parks and installing a computer science or management studies concentration in multiple colleges and universities. A simple three step model that always works is

- Develop a focus on what kinds of vertical and horizontal capabilities the city should be known for. If it’s Financial Services, Business Intelligence and ERP Packages in Sao Paolo, it could be Manufacturing and Remote Infrastructure Management in Shenzhen or even Software Engineering in Dhaka and Amman. A survey of firms specialising in these services and the development of skill building initiatives to generate thousands of young aspirants with the interest and ability to participate will be the formula for success. There are many models available here from the German and Austrian approach of offering vocational education as an alternative to formal education or the approach being adopted in China to dedicate the sixth semester of the formal University degree to imparting life skills needed for success in a business environment or indeed the finishing school approach which opens doors for graduates from lesser known educational institutions
- Demonstrate IT intensity by large scale deployment of IT in the processes of the city itself. Smart schools, connected institutions of higher education, IT penetration into Government, Healthcare and local Manufacturing are all methods of gainfully employing local talent and showcasing both talent and capabilities to potential investors. It doesn’t hurt too that the quality of life in these cities will improve substantially through these investments.
- Launch an aggressive promotion campaign to woo firms to set up base in these cities. It is not enough to have a Government promotion agency established or a name brand consulting group appointed to sell the virtues of the location through occasional road shows and incentive policy announcements. Aggressive brand ambassadors of the ilk of Dewang Mehta who took his “Roti Kapda Makan Bijli and Bandwidth” slogan to all corners in India and the “Serviced from India” concept to all parts of the globe are needed to attract the IBMs and Infosys and Genpact to the location! The success of Tamilnadu in creating an IT superpower in and around Chennai and a host of smaller satellites like Coimbatore, Madurai, Erode etc demonstrates that some continuity of political will and the active participation of industry chiefs can make it happen!

It’s a heady mix – of infrastructure, marketing and serious public private partnerships in skill building that can be created if governments are serious about building global sourcing destinations. The benefits can be huge – Pune is a case in point where over two hundred thousand direct and five hundred thousand new jobs have been created by the IT and BPO sector and new corridors of growth have emerged in the city. Some successful cities like Budapest and Mexico city and aggressive countries like Egypt and Poland have shown the way and with the global services sourcing industry pegged at nearly two trillion US dollars by the year 2020, the opportunity exists for many more cities and countries to join the outsourcing party!