Formula to success
A software developer wrote to me: “Why India’s IT outsourcing is so successful? What is the formula for success? Why other countries cannot compete with India? Can we follow that formula and improve our economy?”
Answer: India’s software outsourcing industry has become the fastest growth catalyst for the Indian economy. In addition to bringing in over $97 Billion dollars last year to improving India’s economy, it is also improving the lives of millions Indian in terms of jobs and standard of living. It helped India to transform from an agriculture-based economy to a knowledge based economy.
In my opinion, India’s success was part of luck and part of being ready when the opportunity comes. India is one of a few countries that work on the Y2K problem where they learn about western business needs. India has a major advantage as most of their workers speak English. India has good university that focuses on technology such as the India Institute of technology (IIT). But the key factor is their IT leaders understand the global situation very well and have strategy to take advantage of it. They start with low labor costs to take advantage of the need to reduce costs of western industries in the 1990s. They gradually move up to higher values to meet the global need of having highly skilled workers due to the critical shortage in developed countries in the 2000s. Their IT leaders understand the changing nature of technology and constantly adjust supply to meet demand. They train IT workers to improve their skills; understand global business; and market their industry very effectively. They are utilizing their own people’s talent to quickly expand their market control all over the world. They follow technology trends to market their services very effectively. Today, you can travel to almost any developed countries and find advertising such as: “India has several million IT workers who speak English well but labor costs are one fifth of what U.S and European wages. India has over 2 million college graduates each year; half were in computer science and software engineering etc.”
China has tried to replicate what India did but not successful. The simple reason: Few Chinese IT workers speak English well. Most Chinese IT companies are small and cannot compete with India’s giant IT companies. Even today, China is still pursuing the low cost model. The education and training are still focusing on programming and testing when the global demand has shifted to integration, architecture, mobile platforms, and Software as a Service. This lack of IT leadership in understand the global market is a key weakness. If you only follow what already happened instead of catching the trend when it starts then you already missed the opportunity.
If you want to follow India’s success formula, you must be prepared and ready when new opportunity come. You must have a skilled workforce that have good command of English language and an education system that is flexible enough to meet the global demands. To begin, you must have plans that focus on improving your education systems with the most up to date technology skills and language training.
Sources
- Blogs of Prof. John Vu, Carnegie Mellon University
