India has come into its own in the last few years thanks to her hard-working, English speaking, intellectual reasonably priced labor force. India has been soaring on the wings of the software boom and outsourcing. Now with the financial crunch and Obama coming into power, there is a certain feeling of uncertainty in the air. Obama has spoken of reining in outsourcing. How will this affect India?
Outsourcing contracts that are not well on their way are unraveling in certain cases. We’ve seen the wild dance of the various stock exchanges. Money that was flowing free for investments in land seem to be freezing now. What does the future hold?
True the financial crunch will make some of these jobs dry up. Western companies will think twice about outsourcing some jobs, but for stalwarts like Intel, GE, IBM etc. who so entrenched in India, it’s just business as usual. Many of them have invested in India and her manpower for their R & D and growth, there will be no stopping this. Citicorp signed up for a nine-year deal with Tata Consultancy Services (TCS) on October 8th. However, we may not see many of such deals. Citi is selling its Indian back-office operations to TCS as well. “This deal sets the stage for a lot of future revenue,” admits TCS’s chief executive, Subramanian Ramadorai. Indian outsourcing companies such as HCL and Infosys are turning to acquisitions as a means of boosting their revenues.
Banks in India with their traditional, conservative approach to loans were definitely not plaqued by the subprime debacle of the West. However due to the foreign investment of banks they have not come out unscathed.
However there is a silver lining behind this cloud. With giants like Intel, GE and IBM is also Microsoft and its Founder’s undying faith in India. Microsoft and Linux are battling to provide their software to India. The Bill and Melinda Gates Foundation ploughed $20 million into India’s Shiksha in 2002. His donation covers the training of upwards of 80,000 teachers and 3.5 million students over a period of several years. Another impressive and worthwhile donation was his #1 million to MIT’s Media Lab Asia project which will be instrumental in training India’s future designers in state of the art media. Besides, Microsoft also invested $400 million in India for education, software localization and development over the next three years. Microsoft has come through with its plan to localize its software in Indian languages in its development centre in Hyderabad. All this is very encouraging for India’s future in the years to come.
These days companies like Cisco and IBM are pitching directly to governments of emerging markets promising to provide the much needed infrastructure from roads, ports and airports to mobile telephone networks. IBM of late has very successfully partnered with AirTel in India. IBM has now become the largest ISP for local Indian customers. Air-Tel’s back-office operations are managed by IBM and the international giant shares the financial risk with AirTel in this venture. Both Cisco and IBM offer to establish long term problem solving relationships with governments, help them design solid infrastructure programmes for them and could build some or all of it.
Japan’s Pharmaceutical giant, Daiichi Sankyo now holds 63.92% stake in India’s Ranbaxy as of this year. Ranbaxy is now debt-free and “well on the path to create a hybrid business model that will unlock the strengths of both companies to bring unprecedented value to all stakeholders,” to quote Ranbaxy CEO and MD, Mr. Malvinder Mohan Singh. The deal also opens Japan’s fast growing market to Ranbaxy and Daiichi gains Ranbaxy’s knowledge of the generics market and its research, development and low-cost manufacturing expertise. Deals these days are increasingly strategic alliances rather than the joint-ventures of old.
So technology, infrastructure, business and finance wise the Indian economy has a lot of stalwarts with whom to shoulder its burden and growth.