Doing Business in India – Part 2

In the previous post, I had summarized a recent McKinsey Quarterly Report on the future of India's Outsourcing, which had emphasized the urgency of educational & infrastructural reform in India. Time after time, report after report in one journal after another seems to focus on our poor infrastructure, not just physical but social & educational as well. And yet it seems, as though the policy makers are just not bothered. While previously we seemed content to deplore the decadent West, while touting our own so-called cultural superiority, today we seem to be taken in by our own hype of having conquered the West just because of our IT & BPO prowess. One software center opens in Bangalore, hiring 5000 people, and the media make it appear as though we’re now the software capital of the world. Add to it the numerous articles in the Indian media about the number of Indians in high positions in various American firms. We seem to forget (blinded & deafened by our own hype) that our software exports are barely 1.5% of the total software industry. If we add the BPO stuff, we’ve probably captured 2-2.5% of the market. For each company coming to India (or choosing to work with Indian firms), we probably have three choosing not to. The reasons given by these companies range from poor roads to Indian accents to cultural issues. While we can decry this as racist or un-informed, the fact of the matter is that a company choosing to set up base in India does it with a lot of trepidation, and it devolves upon us to make it easy for them to do business with us. However, we seem to go out of our way to increase the post-decision dissonance. Our labour laws & unions make hiring & firing way too cumbersome. Our government bureaucracy ensures that instead of spending their time producing & marketing, the companies spend it in queues in government office. (Please do not talk to me about having dismantled license raj; I’ve dealt personally with the customs & excise departments, as well as with RBI & Department of Company Affairs, and I could tell you a story or two that would make your jaded selves shiver) Our roads are not worth discussing, while the electricity supply is good enough for all the software campuses to have large generators. The telecom infrastructure is painful, and if you use the internet at home (rather than the company DSL) then you would know what “pathetically slow” means. Meanwhile we go about, smug in the belief that “the logic for offshoring is inescapable”, that “to survive in tomorrow’s world, every company will have to do business with India/China”. I’m sorry, but that’s bullcrap! Companies will do business if the value they get out of it is more than the cost of doing business. With our creaking infrastructure, poor administration of laws, convoluted bureaucratic procedures & abysmal educational standards, we really are in no position to Rule the World.