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Article by Mohan Babu

2003: The year that was

As 2003 draws to a close, technologists around the globe feel more confident of the year ahead than the year past. In the time-honoured tradition of columnists, MOHAN BABU takes stock of “the year that was.” If the stock-markets were any indication of the general mood, things are upbeat as we approach the close of 2003

The year started off with a bad hangover of layoffs and protracted downturn from 2002. Also, as we began the year, the war in Iraq was looming large over the horizon of the global landscape. Alongside came the SARS scare bringing global air-travel to a crawl. These two geo-political factors contributed to a situation where there was almost a freeze of new business activity, including technology projects, upgrades, etc. From an Indian standpoint, outsourcing—which is highly dependent on cross-border communication and travel—was also badly affected, at least during the first quarter of the year. Client visits were postponed, project related travel halted—all leading to a huge lull in the activities.

As the year progressed, the situation started looking more optimistic and a number of things happened (not necessarily chronicled in order of occurrence):

  • The initial fears of a large-scale Gulf War gave way to some moderation after American assault on Iraq lead to a swift siege of Baghdad after just a couple of months (this is no small achievement, even though sporadic violence continues in Iraq to this day). The Chinese government, under glaring international scrutiny, toughened its stance on SARS. Alongside, the other governments of Asia, travel and airline companies rallied around to ensure that the deadly four-letter word, S-A-R-S, was out of sight and mind.

  • Towards the second half of the year, the American economy started looking upbeat. Although economists still gave a cautionary stance to the signs of ‘jobless recovery,’ things were definitely beginning to look more stable, if not utterly positive. Labour indexes, consumer confidence figures, and the ultimate index of all—the American stock-market—began to look upwards.

  • Reality check on outsourcing: Indian outsourcers continued to make strides in the West. Most large Western companies have started to factor benefits of outsourcing into their global strategies. Consultants and IT forecasters took differing views ranging from “outsourcing is a win-win proposition” to a more alarmist “outsourcing can lead to job cuts in the West.” All this rhetoric, however, did not deter Indian companies that have been growing and executing global projects without too much ado.

There were a few trends in the global arena which focused on India as an emerging force, a couple of them include:

  • Goldman Sachs sponsored whitepaper “Dreaming with BRICs: the path to 2050,” made rounds among the intelligentsia during the last quarter of the year. The article talked highly of the potential of the BRIC group of countries—Brazil, Russia, India and China—during the coming few decades, and how together they could overtake the current G8 Western nations.
  • The McKinsey Quarterly published an interesting article on outsourcing, the gist of which is as follows: “Companies that send their back-office jobs offshore often cut their labour costs by as much as half. But new research by the McKinsey Global Institute finds that these companies risk leaving billions of dollars in savings behind if they merely replicate what they do at home in countries where labour is cheap. The savviest operators redesign business processes to exploit automation and take full advantage of the new environment’s potential.”

The trend towards value added outsourcing is perhaps the key to growth and leveraging of India’s outsourcing strengths. For instance, a recent Forbes article talked about American Express which hired programmers in India to write software to reconcile accounts, and the software now reconciles more than half a million accounts every day. The company, which paid the equivalent of only $5,000 to develop this solution, estimates that licensing more sophisticated database software would have cost several million dollars.

Now, this is the kind of cost effective outsourcing that is bound to become a win-win proposition, not just for global clients, but to India Inc.






About the Author

  • A Bio and profile of the author, Mohan Babu, can be found at his homepage
  • Mohan has authored a book on Offshoring and Outsourcing (Publisher McGraw Hill, India), a link to which can be found here
  • Mohan has also authored an Online book on "Life in the US," available for free download.
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    ©Mohan Babu: All Rights Reserved 2005

    Mohan Babu is an international consultant trying to find the ‘sweet spot’ where IT meets business. E-mail: mohan He is also the author of a recent book on "Offshoring IT Services"

    All rights are reserved. Mohan Babu ("Author") hereby grants permission to use, copy and distribute this document for any NON-PROFIT purpose, provided that the article is used in its complete, UNMODIFIED form including both the above Copyright notice and this permission notice. Reproducing this article by any means, including (but not limited to) printing, copying existing prints, or publishing by electronic or other means, implies full agreement to the above non-profit-use clause. Exceptions to the above, such as including the article in a compendium to be sold for profit, are permitted only by EXPLICIT PRIOR WRITTEN CONSENT of Mohan Babu. 

    Disclaimer: This document represents the personal opinions of the Author, and does not necessarily represent the opinion of the Author's employer, nor anyone other than the Author. This Article was originally published in Express Computers


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