Guest Post: Navin Jaganathan on “India’s IT Companies”

A guest post from Naveen Jaganathan marks the return of this blog from vacation.

R.A. Mashelkar once said “Even if India does not do anything it is inevitable that we will emerge as the knowledge power in the next 5-10 years. If you look at our successes in the past and our emergence in the field of software technology, then this is fairly clear”.

It didn’t appear a tiny bit clear of how India will emerge as the “knowledge power” when I read this way back in 2003. Only thing that was happening then was, India was getting lot of call center/BPO work along with some outsourced IT work. If this is to be dubbed as “knowledge power”, it is not clear what the benefits of becoming one are. If all Indian kids who are playing gully cricket start to play tennis will we be called “Tennis Power” even though none of us even qualify to Grand slams?

Why is everybody tooting the “IT super power” horn over the past few years? It is simply because we could not do anything great in the Manufacturing/Industries sector and bring development to the country. Stephen Roach, the chief economist at Morgan Stanley, after traveling on Indian roads sighs like any other westerner: “A journey to Pune, 115 miles southeast of Mumbai .. by road.. I had been told that the Mumbai-Pune expressway is a modern construction. I would rank the six-lane, barely-divided Mumbai-Pune expressway a B-minus, at best. The exit experience was even worse than the approach — a tedious drive on low-quality local roads — overall, a driving experience that left me exhausted, head spinning, and with a sore back. If this is progress in closing India’s infrastructure gap, the problem is even worse than I had imagined.” On another occasion, “India’s infrastructure gap is almost beyond comprehension — inadequate roads, deficient power supply and transmission facilities, and not one good airport in the entire country.”

The India Infrastructure Report 2004 says it all, “…even relative to our income, our failure in water, roads, sanitation, schooling, and electricity is woeful.” The industry/manufacturing sector does not look promising in India as infrastructure is below par which holds back supply chain management and delivery capabilities and doesn’t encourage FDIs. For example, India did not seem to have taken advantage of the post WTO quota regime in textiles. We lost a great opportunity whereas Chinese geared up for it by transforming Dongguan. One of the trade fairs held in the Chinese province seemed to have drawn 30,000 professional buyers!! Because of pathetic growth in the Indian manufacturing sector, the job growth in the sector is just 2% per annum over the decade.

Thanks to high yield crops, Agriculture is doing good enough to meet internal demands). But with fickle monsoons and an exponentially growing population (which pushes the internal demand), this sector is not likely to take India to any great heights.

With manufacturing and agriculture not presenting a rosy picture, all jumped to the IT/Knowledge power bandwagon. Let us go straight to IT/Services work, which seems to be our strength and certainly is the tight rope on which our GDP growth seems to be walking nowadays.

As the fruit (IT industry) gets bigger and older, it has started to rot. Any doubt? Take two whiffs of the reek, please.

  1. A big company slashes pay for reasons unknown and shrugs off the massive outrage.
  2. CEO of a famous billion dollar IT firm bullshits “IT pros earn handsome salaries, they should be taxed more to improve the infrastructure of Bangalore” and does not bother about these sensible queries.

The two most insensible things that are happening now in most Indian Software companies are Forced Ranking (Appraisals) and Process (CMM) stuff.

Apprisals – In one of the leading companies, there are SET percentages for each ranking. “10% (for eg) should be given top rating of 5 (on a scale of 5) , 40% should be rated 4 and 40% rated 3 and 10% rated 2”. I can’t understand how they argue that only 10% are top performers. What if more than 10% are top performers? Is that not possible? In addition, how are they agreeing that 10% of the company is low performers? Aren’t they ashamed of this? Guess what the folks who got a low rating do? They mostly switch to one or other big companies and those big companies think they are hiring the top 5%“. This forced ranking is a shameful copy from GE which had different intentions behind the implementation

Process – The main idea behind Indian IT companies going for Process certifications (CMM etc) seems to be to woo customers and not to enhance quality. There is not enough tailoring of the standards mentioned and on most occasions, it presents itself as a pain rather than as a facilitator to quality. I wonder why Indian vendors alone go for this and not the foreign counterparts. Google, Yahoo, IBM etc do not seem to have this.

Then there are other debaucheries like the bonds for not leaving the company, haphazard promotions etc. Other dishonorable thing is the implementation of social activities, the only reason for these seems to be to get the PCMM and hog some limelight in the media. Of course there are exceptions to this like Infosys who generously gave 5 crores to the Tsunami from its own pocket where as other Indian IT companies where busy setting up the intranet page to enable the employee to login and donate from his salary. Some companies take advantage of the huge number of freshers who come out each year and employee them for cheap salaries. There are other malpractices like employ a guy and take in only his part of his previous experience, the guy only gets to know when he gets confirmed an year after and doesn’t get a deserved promotion. Then they try all tricks possible with the salary structure with terms like “Cost To Company” etc. These tricks may seem silly to talk about but when we think on the broader scale, it just appalling. An entire nation is (wrongly) pinning hopes on few Indian Software companies who by involving in hoodwinks is not likely to shape anything. If all the companies are short sighted to just look at their margins/ balance sheet without any ear to all the stakeholders’ expectations, it is not going to hold for too long. Its this shortsightedness that is keeping Indian companies transforming themselves into a Google (35 billion market cap with just 3500 employees), a Yahoo, a Microsoft etc.

You might be in a third world country if you don’t believe in Abraham Lincoln’s quotes – “You can fool all the people some of the time, and some of the people all the time, but you cannot fool all the people all the time”

Change in RSS URL

The RSS URL for Deeshaa.org has changed. For those of you reading Deeshaa using its RSS feed, please update the subscription in
your aggregator to the new URL to be http://www.deeshaa.org/feed/.

This blog is back on-line after a few technical changes. I assure you that I have definitely not left the building.

What Kind of English Do I Speak?

Your Linguistic Profile:
40% General American English
35% Yankee
15% Dixie
10% Upper Midwestern
0% Midwestern

The Iran-India Pipe Bomb

No very deep knowledge of economics is usually needed for grasping the immediate effects of a measure; but the task of economics is to foretell the remoter effects, and so to allow us to avoid such acts as attempts to remedy a present ill by sowing the seeds of a much greater ill for the future. —- Ludwig von Mises

Indian policy makers’ optimism is matched only by their short-sightedness when it comes to dealing with matters of national security. To recount all the instances when they have been caught with their pants down would require a book-length treatment, not a short few paragraphs on a blog. But I cannot pass up the latest blunder in the making. I hope that I don’t have to say I told you so in a few years’ time. I hope I am wrong in my analysis but I am afraid that I will be proved right.
Continue reading “The Iran-India Pipe Bomb”

No to Musharraf

From The Acorn an important message:


no-mush-s.gif


Indian taxpayers are paying for the security of a man who is personally responsible for the deaths of hundreds of Indian soldiers, and through his sponsorship of terrorism, for the deaths of thousands of Indian civilians. Far from showing any remorse, he is brazenly unapologetic about the whole thing.


[Source: The Acorn.

]

If only, Lord, if only …

Years ago I used to watch a British comedy series called Bless Me, Father on public television. The setting was a church in a small town in England and the stories revolved around the parish priest and his young curate. In one of the episodes, the curate asks, “Father, why do you spend so much time with the rich in our parish? Don’t you think that the poor need our help more than the rich?” The father replies: “No, the rich need us more. They don’t even have the comfort of the illusion that money is the answer to all their problems.”

Continue reading “If only, Lord, if only …”

Global Voices


Ethan Zuckerman invited me to join in a Global Voices Brainstorm on Tuesday 29th March at the Berkman Center for Internet and Society at the Harvard Law School. It was a great opportunity for me to meet with many people associated with Global Voices:


Global Voices is an international effort to diversify the conversation taking place online by involving speakers from around the world, and developing tools, institutions and relationships to help make these voices heard.


Check out the Global Voices Manifesto when you get a chance.

Douglass North on “Understanding the Process of Economic Change”

Economic change is a process, and in this book I shall describe the nature of that process. In contrast to Darwinian evolutionary theory, the key to human evolutionary change is the intentionality of the players. The selection mechanisms in Darwinian evolutionary theory are not informed by beliefs about the eventual consequences. In contrast, human evolution is guided by the perceptions of the players; choices — decisions — are made in the light of those perceptions with the intent of producing outcomes downstream that will reduce uncertainty of the organizations — political, economic, and social — in pursuit of their goals. Economic change, therefore, is for the most part a deliberate process shaped by the perceptions of the actors about the consequences of their actions. The perceptions comes from beliefs of the players — the theories they have about the consequences of their actions — beliefs that are typically blended with their preferences.

From Understanding the Process of Economic Change, Princeton University Press, 2005.

Make No Little Plans

Make no little plans. They have no magic to stir men’s blood and probably themselves will not be realized. Make big plans; aim high in hope and work, remembering that a noble, logical diagram once recorded will never die, but long after we are gone will be a living thing, asserting itself with ever-growing insistency. Remember that our sons and grandsons are going to do things that would stagger us. Let your watchword be order and your beacon beauty. Think big.

Daniel Burnham, Chicago architect. (1864-1912)

Sequencing — Part 2

A few days ago, I wrote about sequencing of interventions for development. Now it is time to ponder the question of leapfrogging, a buzz word very much favored by some who write about emerging economies. For instance, there is the claim that India can leapfrog into a service economy from an agricultural economy without the intermediate stage of a manufacturing economy. I have delved into this matter in the development path of economies and agriculture and development. My position is that India cannot leapfrog from an agricultural to a service economy: it has to have a robust manufacturing sector as well.

Leapfrogging is possible but mostly it is restricted to technologies. For instance, areas of India which had absolutely no telecommunications infrastructure don’t have to go through the sequence of first getting telegraph and then wired telephones and then move on to wireless: they can leapfrog the now obsolete technologies and go directly to wireless. It is always possible – indeed necessary – to leapfrog technologies because advanced technologies are cheaper.

Advances in technologies provide the same functionality at a lower cost and reduced complexity for the user. Consider the VCR. When it was first introduced, they used to have little tuning wheels which needed to be fiddled with before they worked. Later models became plug-and-play.

Unlike technology, you cannot leapfrog the various stages of development. A century ago, to be educated, one had to be literate and numerate. Same holds for today even though we have digital gizmos and computers. Indeed, to be able to effectively use the products of high-technology, literacy is an absolute necessity. Functional skills required for using high-tech all involve the ability to read and reason. I grant that illiterate idiots can use a cell phone, but that is not what I would call the effective use of high technology.

The so-called “digital divide” cannot be bridged by simply installing lots of PCs in areas where they don’t exist and connecting them up to the internet. If the people are unable to use them, they serve no purpose other than to enrich the peddlers of hardware and software. Furthermore, there is the opportunity cost of spending limited resources on useless high-tech gizmos.

You cannot leapfrog development. It cannot be done at an individual level. And it cannot be done at a societal level. Although development paths may differ, the sequencing within a path cannot be radically altered because there are strict dependencies. Basic functional literacy is a pre-requisite to pretty much anything that one does. The use of high-tech depends on literacy and therefore if the population is illiterate, even gifting them with free hardware will not make a difference. The pre-condition for bridging the digital divide is therefore the bridging of the literacy divide.

Of course, there are those who will argue that high tech be used for bridging the literacy divide. In a conference that I had attended some time ago, the question “Can ICTs be useful for rural and remote areas of developing countries, especially the poverty-stricken regions?” was seriously asked. I wrote:


We need to examine that question for a moment. At one level of analysis, it is hard to not answer that question in the affirmative. At another level, it is a meaningless question. Merely because it is syntactically correct does not imply that it has any content. Consider the question:

Can magnetic levitation superfast monorail transportation systems be useful for rural and remote areas of developing countries, especially the poverty-stricken regions?

Clearly, yes. Not just magnetic levitation superfast monorail transportation systems, but an almost unending variety of things would be useful for the development of poverty-stricken remote areas. Not merely for those areas, all of those unending variety of things would be useful for the development of not so remote and not so poverty-stricken areas of any developing country. Thus that question is actually content-free.

I think that the fundamental problem of development is one of sequencing, of prioritizing. It is the same question that one has to ask in one’s own personal development: what is the important next step?