...IT Outsourcing & Trends in Asia Pacific and Europe

I think I just couldn't wait any more, so decided to do immediate research on this topic. I started pondering on how things started working for each of the countries in Asia Pacific, Western and Eastern Europe. So I came up with the following SWOT analysis (Source of research from Carnegie Mellon University Benchmarking Study):

What does the Asia Pacific Region offer in Outsourcing?

• Some of the fastest growing software industry in the world are located in Asia
• Growth rate > 35% annually over the past 5 years
• Highly educated & motivated workforce (India, China, Japan ...)
• Strong engineering & manufacturing focus (Japan, S. Korea, China)
• Well-established infrastructures (Japan, S.Korea, China)
• Strong government support (S.Korea, China, Singapore)
• Many countries have adopted “India’s IT Model” as the growing vehicle for economic prosperity
• Highly entrepreneurial & innovative
• Some countries are well adapted to global business but many are still experiencing language and cultural issues
• Some geo-political risks

What does the Western Europe offer in Outsourcing?

• Software industry is steady at > 8 % growth rate annually
• Highly educated in some areas (Ireland, UK, Scandinavia)
• Strong engineering & telecommunication focus
• Very protective of legacy systems & applications
• Governments are still the largest consumption of software
• Very high overhead cost due to bureaucracy & liberal laws
• Outsource “near-shore” to Eastern Europe
• Culturally diverse (languages, legal, business practices etc.)
• Economic polarization – some fare better than others
• IT Polarization: Scandinavia and Ireland are very active where France and Italy are more conservative
• IT education in many countries is slow to catch up with fast technological changes
• High unemployment among the younger generation

What does the Western Europe offer in Outsourcing ?

• Software industry is growing fast but still immature
• Highly educated & large untapped talent pool
• Strong mathematical focus, limited practical experience
• Lack IT infrastructure & support environment for global business
• Governments are the largest consumption of software
• Low labor cost but not well managed
• Receive outsourcing works from Western Europe > USD $ 500 Million
• Culturally diverse (languages, legal, business practices etc.)
• Economic uncertainty due to growing pains – change is difficult
• Political uncertainty - Several social models and directions resulting in high risks business environments
• High unemployment among IT labor force - Most skilled workers left for Western Europe – significant “Brain Drain”
• Limited project management & relationship management skills

More on Trends and final closure comments in the next blog...

IT Outsourcing & Trends

I was very impressed with the way the Information System classes concluded at IE Business School for the first term (Nov '08 - Feb '09). Working as an IT/Telecom /Travel Services Consultant for the past five years, I had to constantly deal with the concept and the modelling of the offshore-onsite model, also known as Outsourcing/Offshoring. So before the economic downturn officially came into picture I was researching on the different trends in outsourcing, and how it is being perceived especially in the western and eastern europe, taking into account the different unions and regulations these countries have. Before I joined IE Business School, I had met with one of the Strategic Consultant from HEC Paris somewhere in 2007 and he sort of interviewed me on why people go for MBA and as well opened upto what he intended to do after the life as a consultant. He was seeking opinions on outsourcing some part of his business, and this is were I thought I was good at. Taking in numbers through my experience.

We all know, earlier it was the pre-historic man who took charge of the world by looking for food and shelter. Somewhere between 5,000 BC and the 18th Century (I would like to call it as the "Agricultural" period), it was the Kings, land owners, emperors seeking to conquer land and crops and build onto their assets. Between the 18th Century and the 20th century began the industrial period. Factories adn equipments came into picture. OIL, Steel, Finance were teh key jargons then. And then finally the technological age, skills, knowledge, talent, people and process. Software Entrepreneurs and Technologists were on a roll. (Lets learn and forget the .com bubble burst here :)) This is were Outsourcing, along with various other technology and concepts, kicked in.

So I thought, what can I offer him for his business. I started noting key requirements and started making some suggestions on the regions he can start picking up on. So the IT Outsourcing market increased 80% from USD $19 Billion in 1999 to more than USD $100 Billion in 2006 according to the sources from IDC http://cdn.idc.com/. The IT outsourcing market was lead by India with 45% of the outsourcing market share, 18% to Canada & Europe, 18% to China, 8% to Russia & E. Europe, 6% to South America, and 5% to Southeast Asia (Singapore, Malaysia, Philippines) (Say the sources of University of Michigan Business School)

More on the research in the next blog...

The Perfect Role Model

As the Satyam debacles unfold, people are looking upto their role models within the industry for their expert opinions. Hope no more surprises out from the closet, no more role models going down. We are all shaped by our environment. Most of us are deeply influenced by our teachers, parents, friends and close social circles. For me, these influences brought out the best in me. As an aspiring entrepreneur, no other role-model in this field came as close as Mr. NR Narayana Murthy did; now the caretaker of Infosys Technologies Ltd and Infosys Consulting. “NRN” as most Infoscion’s address him, embodies the qualities most business leaders, aspire for. A man is admired when you feel alive and active in his presence. Hailing from a middle class family, NRN has always made it a point to lead by example. Blending old-fashioned values with visionary thinking, NRN had come to define the standards of personal integrity and corporate governance for India Inc.
This is where the likes of Ratan Tata, Azim Premji, Dhirubhai Ambani, Vijay Mallya and NRN built the fame of India Shining and put India on the global map for others to follow. This is how the legends are made of. For the past two decades, NRN has led the IT charge for India as co-founder and CEO of Infosys. After handing over the operational reins of Infosys, Mr. Murthy now spends most of his time traversing the globe serving on the boards of organizations and premier business schools such as Wharton and the Tuck School of Business in New York, and hobnobbing with heads of state on world affairs. NRN is an optimistic, a fighter and one who can stand up against all odds, and this notion I acquired during one of his speech in Infosys, Pune. I had my share of interaction with him, and it was nothing more than a victory to me, than to be asking questions to my childhood hero and one of India’s leading industrialist. The rookie me asked, "Sir, what is your success mantra?", and NRN replied "Again, please do not address me as Sir. the answer is Passion". He mentioned again, because the audience constantly addressed him as Sir, and rightly so, and he remained humble enough to be known with his name, and for the uncomfortable one's, he suggested adding an extra title such as Mr. With a squeaky clean image and impeccable credentials, NRN is to me, and to billion others, a PERFECT ROLE MODEL, not only within the business community, but outside it as well. His entrepreneurial thinking, perseverance and simplicity are the qualities I hope to emulate.

More about Mr. Murthy - http://en.wikipedia.org/wiki/N._R._Narayana_Murthy

Satyam Shivam Sundaram...

Satyam Shivam Sundaram, which means a beautiful truth in the form of God, was an below average 1978 bollywood movie which faced critiques and initial hiccups to get through the censor board. But this was not the case for a company "Satyam". Start of 2009 saw the chairman and chief executive of one of India’s biggest outsourcing groups, Satyam Computer Services, confess to fixing the company’s books in a $1bn fraud described as the country’s “Enron”. This had taken the entire India Inc by surprise and comes as a shock to many. Once a role model and hero for many in the end turned out to be a fraud. The shareholders, clients and more importantly the earnings of 50,000+ employees were at stake. As the satyam fraud started unfolding, more and more people started coming into the picture. PwC the auditor of the firm, were immediately taken out and KPMG and Deloitte where assigned the necessary roles. How can one man create such a huge mess and get unnoticed? I am sure the story goes beyond that !!

Is money everything? It's a debatable topic, but yes money is important. Common lets be honest - it's a means of living. I set out to question what the hell money is and what it does to the different classes of people. I set out to find out what other people thought about all this. I set out to prove that there was something to be learnt by looking at all this closely. How do we ensure that Ethics in decision making, Character Ethics and Corporate Governance are always maintained at highest levels? Even incentives will eventually involve money, but will that stop from cases like Enron, Bofors Scandal, the Satyam debacle to occur?! The point to ponder on is how do you and we all in this society would act to this situation.

Leading by example...

First and foremost - Wish you a prosperous new years !!
While I worked and still work in large teams, and that I debated with some of my colleagues on the pros and cons of leadership, I decided to take this topic for the new year. Enjoy :)

As Mr. N.R. Murthy the founder and now the caretaker of Infosys, said, Leadership about leading by an example. as a leader of a large group of diverse people I tried to work within the framework of this adage. I believe that leading by example is about being first. For instance, if you want trust, be trusted first, if you want pro-activity, be proactive first, if you want timelines, be on-time first, and this I learnt during my stint when at times due to hectic work timings I was at times not able to be with the team on time for an early morning breakfast or coffee. For me, Leadership is about showcasing part of who I am. My parents have always put a strong emphasis on education and ethics. Throughout my personal and professional life, I had always maintained a very strong belief in doing what was ‘right’ and tried to operate within a personal framework that was honorable to this.

In the middle of my first project with with a travel & tourism company, I went through a significant failure that stretched the process of analysis and unnecessarily delayed the schedule of the software delivery. In laying down the conceptual framework, I was at times tempted to teach the team shortcuts to meet the deadline. In any project, process adherence will take a beating if you do not have adequate duration available. But as a group, the team worked together well – we debated, we confronted, we learned, but we never compromised on Process.

My ex-employer (from 2003-2008) has always followed the highest standards of corporate governance. Today every action of the company is the focus of public attention. My challenge was to continue maintain that standard as the company competed globally, and even after my departure, I still practice to do so. The experience today has been rich, which has helped me quickly organize the tasks and resources the team required. After all implementing the values and maintaining enthusiasm among team members are the two most important goals that a team leader has to set.

Me, My friend and some rapid fire questions to the President !!

Every week I attend network gatherings, and when I mention I am from Mumbai, India - there's a sorry reaction. People at times ask me about the situation - tourist per se as well as from political perspective. And I more than welcome then in explaining them of do's and don'ts of travelling.

India has a long history of extreme weather patterns. Any adverse affect of the climate change would indirectly impact the Indian economy. The current political situations at the national level revolve more around terrorism and development of the nation. I am sure there would be 'n' number of blogs on this topic already, and being a idealist and sort of capitalist, I would like to view the leaders of my country being more pro-active and sensible in their approach towards policy making.

More recently my entrepreneur friend at IE Business School questioned me about global warming, setting up a firm in India and how I would address the issue to the President/ Prime Minister of the country if I had a chance to meet them for only 5 mins. Well that was a test and a teaser sort from my friend. Also, this made me wonder that the development versus environment debate makes it much more difficult for the environmental issues to come to the centre stage of any political agenda. Global warming is very essential, environmentally, politically and economically. I firmly believe that the political leaders should come forward to stabilize greenhouse gases using stringent national policies and effective market mechanisms, like moving away from consumption or focus on sharing resources, thus looking forward to remodel our world.

If I had the opportunity to meet the president or the prime minister, I would like to ask her/him about the environmental policy - asking her/him about Global warming and what will it take to implement a cure that is actually more costly than the original affliction? Why that global warming is not discussed with an open attitude, so that the budding entrepreneurs can carefully view their investments to avoid making big and costly mistakes or any repetitive mistakes? It is just not a matter of choosing the optimal economic path, but rather decide what kind of society we would like to live in.

With this meeting I would listen, question and offer my opinions. Finally I would like to take a photograph of the two of us, with an autograph on it, to make me realize that yes it all happened!! My friend was more or less convinced with my 5 min approach, but couldn't stop laughing on the photography statement. Well, not daily you get to meet big personalities - right?

I failed, I learnt. (PoV)

My most memorable and enduring learning experiences have stemmed from suffering the consequences of my own mistakes, and those lessons have shaped me into the person I am today.

In any project, process adherence will take a beating if you do not have adequate duration available. I experienced a similar situation during the middle of my first project in 2004, where I went through a significant failure that stretched the process of analysis and unnecessarily delayed the schedule of the code delivery. In laying down the conceptual framework towards defining the coding and analytical process, I was at times tempted to teach my team shortcuts to reach the deadlines.

I have learnt that we are all susceptible to failures; success is a result of persistence and discipline. Years later, the self confidence I gained through these results helped me to overcome a very different type of challenge, and thus any problematic behavioral aspect has gradually given way to the acceptable working style. I learnt to lead the hard way.

I am passionate about things that count, and let go of things that doesn't. It just makes it easier for me. This way I accept the good and eliminate the bad. I have had many a role models who have simply shown me the way to react to each failing and succeeding situations. Be it hot shots like Mr Narayana Murthy (Infosys), Sachin Tendulkar (God of Cricket), Michael Jordan (NBA), Armstrong(Cycling) or be it my family, friends, mentors, colleagues.

We all do fail at some point in our lives - at work, in sports, in things we love passionately, but true success stems in embracing failure with a pinch of salt and learning from it. Ask yourselves, do you feel that you have it in you to stand tall to the obstacles in life? If no, then take help from family and friends. If yes, then best luck for everything ahead! Remember, it is your passion to achieve something and your positive attitude that will shape your character.