Media, analysts love to knock down Indian outsourcers

It is probably got to do with the success of the Indian outsourcing industry, or can be perhaps put down to an unconscious resentment that the Indians are close to challenging big global services companies. Or maybe they are just plain lousy in their forecasts.

The fact is that a story about Indian outsourcers going down the tube, or almost down the tube, sells.

It started with stray incidents of data theft in Indian call centers. Adopting a shocked and sanctimonious stand, the media and analysts tried to embarrass not only the outsourcer affected by the data leak, but the entire Indian industry. The media quite forgot that there are more incidents of data theft in call centers in the UK and in the US. Reporting on data theft got less popular after an exasperated Nasscom lay bare these comparative figures on data theft.

Perhaps to be fair to the media and analysts, it was only goading India to do better. After strong measures by Nasscom, a local trade body which believes that India should raise the global bar on best practices, there haven’t been incidents of data theft reported in recent months from India.

As India got successful, and not only Indian outsourcers but multinational technology companies like Dell Inc., Intel Corp., SAP A.G., and Oracle Corp. started expanding their operations in India, the prophets of doom started forecasting over two years ago that Indian workers were getting too expensive, were getting too difficult to hire. The upshot: India was going to lose its competitive edge to China, Vietnam, and the Philippines.

They miscalculated on a number of counts. Yes, Indian engineers and other workers were getting a little expensive, but where else do you find such a vast talent pool to set up development centers or call centers with thousands of staff ? Even if Indian staff is getting expensive, the quality still seems to be in the favor of the Indians, else it gets tough to explain the continued expansion in India by multinational companies.

The proverbial last straw for the Indian outsourcer was said to be the weakening of the dollar. Indian outsourcers were expanding outside India because the strong Rupee was killing them. Once again it was overlooked that setting up some near-shore centers to Europe and the US would not dramatically change the economics for Indian outsourcers, but were only designed to improve customer comfort-levels with the outsourcer.

Instead dramatic cost-cutting, which Indian outsourcers are good at with their process focus, seems to have done the trick.

Less than a week after Infosys Technologies Ltd., said it had improved its margins despite the weaker dollar, Tata Consultancy Services Ltd. on Monday said that it had got around the currency impact by hedging and cost cutting. TCS’ revenue and profits grew 45 percent in the quarter ended September 30.

Wonder what the pundits will come up with next ?

Related articles:

Indian outsourcers not yet hit by weak dollar
Indian outsourcers not floundering, not migrating

Why the US should stay in Iraq

On August 22, US President George Bush told war veterans that a US withdrawal from Iraq would lead to bloodshed and reprisals akin to those after the US withdrew from Vietnam.

Bush’s comparison of Iraq with the withdrawal in Vietnam has been described as inaccurate by many historians.

The scary fact remains however that should the US and its allies decide to pull out from Iraq, the country could in fact witness a blood-bath of violent sectarian squabbling.

There is a growing school of thought in the US and other countries that the strife among the Sunnis, Shias, and Kurds is an internal problem of Iraq, better left to the new government in Iraq to solve. Some have even said that the government in Baghdad will move to reconcile the factions, only after it knows it does not have the US to prop it up.

Having invaded Iraq in 2003 with the multiple aims of removing Saddam Hussein, destruction of weapons of mass destruction (WMD) that were never found, and to bring democracy to Iraq, the US cannot now wash its hands off the problems that the new dispensation has thrown up.

The country does not as yet have a government in Baghdad that is accepted by all in the country. It does not have a strong police force that is respected and seen as impartial across the country, and is still trying to rebuild an army that was disbanded after Saddam Hussein’s government was brought down.

The Iraq oil and gas law, also referred to as the Iraq hydrocarbon law, approved by the cabinet in February, has still to be passed by Parliament. Under the proposed regulations, oil revenues will go to a central fund distributed to all Iraqis in all regions and provinces according their populations.

The oil law has however become a political battleground between those who favor a more unified Iraq and those who want a decentralized federation where provincial governments have larger rights over the award of contracts and the revenue from the oil and gas under their geographical jurisdictions.

Al Qaeda of Mesopotamia is clearly a key threat to the US in Iraq. But it is facile to blame all the violence in Iraq, and the problems faced by US troops there, on Al Qaeda of Mesopotamia. The violence in Iraq comes from a variety of factors including feuding militias, both Shia and Sunni that have still not come under the control of the government in Baghdad.

Clearly the US has a long way to go in Iraq both on the military and political front.

The political initiatives so far have assumed that Sunni, Shia, and Kurd populations will eventually put their heads together in a pan-Iraqi nationalism. What if they decide to fight, regardless of the consequences, for the control of Baghdad and the whole country ? What if they decide to partition the country, and feud and kill over which land and which part of the oil reserves should go to them ?

Bush has made a lot of the Anbar Awakening, the optimistic name often given to the move by some Sunni militias in Anbar to join Americans in fighting Al Qaeda. The US will surely pamper Sunni militias to counter the Al Qaeda influence, and hope to also nudge them into reconciliation with the Shias and Kurds.

There is however also the possibility that the Sunnis have teamed up with the Americans for arms and cash to be used after the Americans are out. They must be aware that the US administration is under pressure at home to get US troops out of Iraq.

Having played the role of global policeman, and got into this quagmire, the US will now have to stay there. If it pulls out prematurely, and there is civil war, the blame will be pinned primarily on the US. Public memory is short, and there may be some who may even argue that Iraq was better off before the US ousted the butcher Saddam Hussein.

An Iraq going through a civil war will also be to the US’ disadvantage as it will provide opportunities to US enemies like Iran and Al Qaeda.

All in all a thankless task for the US going forward.

When Democrats in the US demand the withdrawal of US troops from Iraq, it is very reminiscent of Vietnam. When the going was just too hot, and public support at home waned, the US pulled out from Vietnam leaving behind all the people and interests that had counted on America’s continued support. These included the puppet rulers, but the rest were ordinary people caught on the wrong side.

Didn’t many of the Democrats including Hillary Clinton vote in favor of the Iraq war ? They probably didn’t want to be spectators or protesters during those heady days when images flashed worldwide of a tall statue of Saddam Hussein being pulled down. But when the body bags started coming home, they quite naturally lost their nerve.

Both Democrats and Republicans showed lack of foresight on the US invasion of Iraq. The Democrats could do worse by now demanding a premature withdrawal from Iraq.

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