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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.
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