The Role of Countries
by Stephen Lane, Group Manager, Infosys Technologies
Many readers have commented about trends in resource availability and infrastructure. Leaving geopolitical risk for another day, then, I’d like to open a discussion about the role of countries in global sourcing with respect to human resources, convenience, and infrastructure in India.
India possesses clear early mover advantages, especially in terms of human resource availability, quality, and cost. These are, for the overwhelming number of companies, the primary motivations for global sourcing. Starting with demographics, India presents a much more positive picture than most other low-cost sourcing locations, including China, with their projected steep declines in the number of working age individuals as a percentage of total population in the next 10-20 years.
However, only 61% of India’s people are literate and a mere 7% in the 18-to-20 age range is enrolled in higher education. The numbers for China are roughly 91% and 15%, respectively. Ensuring a large labor pool, not only to meet future demand but also to maintain a cost advantage, means investment in education and bringing more people into the workforce.
By convenience I mean cultural compatibility, the availability and expertise of potential sourcing partners, business transparency, and travel. Here again, India possesses clear advantages. Leading service providers such as Infosys have well-established relationships brand-name clients and world-class business and corporate governance practices. And, as long as the demand side for global sourcing is focused in Anglophone countries the Indian services industry is well-positioned to maintain its leadership.
How long will be the case, however, is open to question. Especially as demand begins to shift to non-English speaking countries and, as one respondent noted, China begins to realize the results of its large investment in English education.
Finally, in spite of its many wonders, India is not exactly the ideal business travel destination, which brings up infrastructure. Granted, India has far more important needs than making things easier for services companies and business travelers. Nevertheless, companies must heavily invest to make up for the poor infrastructure. At the same time, negative comparisons to China continually appear in the industry press, causing people to note that India’s infrastructure problems are having a negative impact, not only on my industry but on economic advancement in general. True or not, perception is reality.
I raise these points not to sound an alarm about India’s services industry. I am well aware of things that Infosys is doing to ensure its future as well as maintain its role as a good corporate citizen -- as well as efforts by the national and state governments. Moreover, if one were to ask me about China, Russia, Brazil, or other countries I could come up with similar concerns, some even more grave than those facing India.
Nevertheless, although India’s services workers are among the best in the world, they are not some new species immune to changes in the world around them. So, concerning the role of countries in global sourcing – or any other business in the flattening world – I would say that it’s about creating environments where people can flourish.