July 18, 2007
Econ 101 Works... Eventually
With all the brouhaha about outsourcing last election season, I thought this article provided an interesting snapshot of what techie outsourcing looks like today -
Silicon Valley has helped power India’s outsourcing boom by shifting technology jobs to that country. Three months ago, Munjal Shah reversed a bit of that shift.Shah, who leads a California start-up called Riya Inc., had opened an office in India’s technology capital of Bangalore in 2005, hiring about 20 skilled software developers. The lure was the wage level: just a quarter of what experienced Silicon Valley computer engineers make.
Then Indian salaries soared. Last year, Shah paid his engineers in India about half of Silicon Valley levels. By early this year, it was 75%.
75% of an average US Engineering salary goes FAR in India. Nevertheless, the big picture point remains true — salaries eventually normalize around productivity and, given the fiercly competitive global tech market, infinite pools of 3rd world workers aren’t exactly lying in wait (of course, the right policy mistakes can make this happen, but let’s not go there for now). It is, on the otherhand, pretty impressive and a testament to modern tech + capitalism that it’s happened this fast.
My company, Roundbox, has some similar, interesting anecdotal experience with outsourcing…
We started our operations ~3 yrs ago with an offshore office in India which was ultimately staffed up to about 10-15 folks. And, we also eventually closed down the office for very similar reasons to Munjal Shah @ Riya and the reasons documented in the article —
- Cost: It wasn’t much cheaper than having folks in the US. As a venture funded startup, much of the attraction to outsourcing was, obviously, about getting the most mileage out of precious working capital. And it was getting more and more expensive every 6 months -
Nasscom puts wage inflation in its industry at 10% to 15% a year. Some tech executives say it’s closer to 50%. In the U.S., wage inflation in the software sector is under 3%, according to Moody’s Economy.com.
…an average $5,000 annually for a new engineer with little experience — the experienced engineers Silicon Valley companies covet can now cost $60,000 to $100,000 a year. “For the top-level talent, there’s an equalization,”
- Churn: The massive boom in Desi tech meant that turnover rates for employees was becoming greater than even Silicon Valley. For complex tech, turnover KILLS.
Pervasive Software Inc. in Austin opened a Bangalore unit in 2004 and hired 45 people. But soon its annual turnover was more than 25%, says the company’s CEO, John Farr. The company kept investing in training workers only to see them leave.
- Name Brand Hiring: For a variety of reasons, there’s a strong preference for namebrand MNC’s amongst the tech talent in India and, as a new and thus unknown tech company, we couldn’t compete against the Wipro’s, Google’s & Microsoft’s when it came to hiring. In the US, on the other hand, quite a few young, ambitious folks would rather try their luck with a startup vs. going to IBM. Eventually, perhaps, Indians will feel, as their silicon valley brothren do, that “I can get a job at IBM anyday” but until that level of security is felt in their bones, risk tolerances won’t be where it is here in the valley.
- Quality: Perhaps most controversially, the quality just wasn’t all there. Many of the folks were no doubt fantastic, but too many of the famously touted “500,000 tech grads a year” were a notch or 2 below many vo-tech educated folks here in the US.
In a 2005 study, McKinsey & Co. estimated that just a quarter of India’s computer engineers had the language proficiency, cultural fit and practical skills to work at multinational companies.
But in our case, it wasn’t just language but actual core computer science. The ones who were truly as good as the folks we had in the US could easily command… a US-level salary. Return to square #1. - Communication: Famously, outsourcing works great if your product specifications are tightly defined, with crisp clear milestones and well understood, a priori, secondary requirements. Just about every one of these simply ain’t the case in a startup tech environment. When your requirements can’t be clearly stated, management overhead grows exponentially… and once again, in a startup, lack of overhead is supposed to be your competitive advantage -
Kana Software in Menlo Park has one engineering manager for every 25 to 50 engineers, but it found it needed one for every five to 10 engineers it employed in the Indian city of Chennai.
While there are tons of examples otherwise…. at least in our limited experience, outsourcing to India didn’t work out. Perhaps there were little tactical things we could have twittled with to eventually find an arrangement that could work but, alas, we didn’t have time….
Moral of the story - global trade and old fashioned econ 101 has created a pool of folks in India who make some pretty serious dough - even by US standards.
vinod on July 18, 2007 12:13 PM in · T·r·a·c·k·b·a·c·k address · Direct link · Email post
Well, India is certainly getting more expensive across the board. As a consumer, it's no longer the bargain it once was. People's higher salaries are doubtless contributing to that.
There is still a lot of scope for outsourcing.. It's still the beginning of a global market. The number of viable tech grads is only going to increase in India, with all the demand around. And it's not just Bangalore to look at. Ofcourse, there needs to be a good business plan for any outsourcing venture to work well. I see a lot of potential for high-end outsourcing in the areas of finance et al. It already started with many cos. moving out of NYC to low-cost areas like Buffalo, Cincinnatti..
My brother-in-law's start up had serious issues with this as well, particularly when it came to quality and work ethic. Their Indian vendor had issues with attracting the right type of talent (not top tier) and with that came the quality and work ethic issues. It seemed when a project was 90% finished, people considered it a done deal. The expectation was always 100% done, not almost done. I think they eventually pullled the project from India and had a few Russian guys here take care of it for more money, but timely delivery of quality finished product.
An uncle who's invested in Indian tech companies also had problems with odd requests. A parking spot and getting paid more than a neighbor were certain demands. The parking spot was generally not used, as the employee came to work on a two wheeler. He needed it to show families when scoping out prospective brides that he has a parking spot for his car (a status thing). As a retort to the demand to be paid more than his neighbor, my uncle told the guy in the interview that he was lucky Bill Gates wasn't next door, else his company couldn't afford to pay him a few rupees more. The dude didn't really get the joke - he was dead serious about being paid more and his skills were in demand. Supply, demand, supply, demand, supply...
The real issue is lack of infra-structure and inability to scale.
Obviously investments in education and training have to deepen, there need to be 10X more high schools, 2x engineering colleges, etc. Unfortunately, the political system doesn't support that, people are unable to demand this change, we still have an over-cautious economic system that focusses on maintianing the status-quo -- it has taken 20 years for Bangalore to construct a new airport (not ready yet!).
So there you have it. A small pool of people will do well but the opportunity for larger change will pass india by.
Yes, for America/Americans I can put forth all different arguments as to why outsourcing/offshoring may be bad for them.
For Indians and other poor countries - yes they have a long way to go in terms of quality and have to learn a lot. But there is nothing to be ashamed or feel sorry for what India is doing. It is all fair in the name of laissez fairre. Do the dirty work today but keep aiming high and one day you will be there. It is just like the poorly educated parents/grandparents in India who toil with menial work to be able to give their children better education.
Actually, its not quantity thats needed, its quality. Being a product of that system, I know how woefully inadequate an undergraduate or graduate degree from India are (from all but a handful of institutions). The desi education infrastructure is geared to produce hundreds of thousands of so-so graduates. In response, Wipro and Infosys have developed world-class training programs to catch their recruits up to speed.
I was talking to my dad about this. He lives in Bangalore and is retired. I asked him if he had to choose between a job in Bangalore and one in the US for the same pay, which would he choose. He said the one in the US anyday - the daily aggravations from pollution, corruption, traffic were just not worth the extra moolah to him.
Regarding 'Name-Brand Hiring'
The biggest area where start-ups lose out against well-known names is Campus Recruitment. The number of people Infy/TCS/Wipro/Accenture/IBM pick up from single colleges alone is a staggering figure. For instance, 150-200 from my undergrad College were offered jobs at TCS, 100 for Infosys, and so on. At the end of an engineer's final year, 90% chances are that he has been successfully 'placed'. Even if he didn't make it into the big names like Microsoft/Google , there is enough 'prestige' associated with Infosys / TCS /Wipro in society for an engineer to gladly join them.
Ultimately, the only people in Bangalore who are out there searching for jobs are people who didn't make it from college, and that already says enough about their quality, considering how easy it is to get a job in college. Start-ups going off-shore is really a bad idea, because there is no way they can attract the cream of the crowd.
I think safety of jobs and resources is an important factor for most Indian job seekers and working for start ups may be akin to satisfaction top level of needs per Maslow's hierarchy (self actualization), it will be a while before graduates in a country like India will place the same value to start ups and established brand names
In India for profit undergrad institions have cropped up everywhere...many of them are crap.
The major reason that Indians don't want startups, no matter how "hot" the firm is in the valley, is because a young man's value on the marriage market is based to a large part on the global brand recognition of the employer. "Boy works for Cisco/MSFT/TI/GE/Google" is more likely to get the lemurian head waggle of approval than "Boy works at Riya/Roundbox". For the most part engineers who are eager to join startups are "US returned" and know the game. Interestingly the salaries for what I would consider more intellectually demanding work (RF circuits, DSP, comm systems design) seems to be lower than what the run of the mill code/test guy gets
Vinod, do you know what technical tasks your company was actually outsourcing? I would imagine it was the implementation of designs based on broad specifications that people here came up with, but are you able to elaborate?
On the quality thing, here's an interesting article: Coaching Factories are Dumbing Down the IITs and Feedback on it. I can hardly imagine the situation being any better anywhere else. BTW, you might need to login to access the article, though it's free - the April 30 2007 issue of Outlook India.
TISCO, among others, has stopped recruiting at the IITs.
Reading the comments, I get a feeling that most people see outsourcing as one process with single business model.
Labor arbitrage (if we consider that to be the biggest factor contributing to outsourcing) can be used in multiple ways to the organizations' advantage.
For instance, Start-ups starting their own set ups in India does not make sense from any perspective. Difficult to recruit, no brand name, no job security etc etc. Why should a graduate, good quality or otherwise, choose an option where he/she sees a lot of negative. Esp. when they have alternatives? Ideally, Start-ups thinking about outsourcing should tie-up with the larger firms, Infy/TCS/WIPRO/CTS/Satyam or others. That gives them the advantage of outsourcing, while getting assured quality from these firms.
It is important to realize that the opportunity of outsourcing is huge across the globe. However, like any other business, there are multiple issues to tackle before succeeding. Setting up office in India (or China or Lat-Am or Eastern Europe) is the easiest of steps.
As far as the thought that boys / men seeking jobs to enhance their "position" in the marriage market (louiecypher, did you refer to girls as well?)... Guys, please wake up. Do you frankly believe that a normal educated guy, in the US or India, seek jobs to get a bride? Come on. Next thing I hear is that they ride an elephant to work and charm snakes as a hobby.
@KarmaByte #11: "But aren't we discussing people who might also be switching jobs?"
Mostly, the situation is one of the two:
1) You get into a 'services' job like Infosys/TCS/Wipro. At these places, you need 2-3 years before you go 'on-site' which is basically the cauldron of gold at the end of the rainbow. People slog it out for a crappy pay just so they can finally smell the US/UK $$ .. Once they reach these shores, they try to remain there for as long as possible... or switch to another job because of their H1B status.
2) You get a 'products' job like SAP, Microsoft, Google, GE - These companies are huge on the 'brand' factor not only for desis but for almost everyone in the s/w market. It's hard to displace these guys from their jobs because they are happy with pay/brand/ and treatment.
Ultimately, a start-up will have to attract people with 3-4 years experience(since they couldn't catch them 'fresh') and by that time their values on the market would be so high that it doesn't make sense being off shore in the first place.
Vinod, it's a bit reductionist to look at relative differences between national macroeconomics and then try to argue for normalization in the global economy. I understand where you're going with this, but we have yet to see if this extends to other regions, if this just means that industry will move again to the lowest cost labor market (when possible), and if this spurs inflation, wealth disparity, and lowered relative standards of living for those who are not lucky enough to make it into the outsourced pool.
I'm completely awake. And yes this is part of the reasoning for many, but not all. If you want to dismiss this idea as the creation of white dudes go right on ahead. Better job equals more desirable girl+heftier dowry for people who come from families where dowry matters (i.e. most of the middle class). I don't want this to get sidetracked, but you are simply going to exhaust yourself if you take on the role of India's PR/media agent.
Remember the 90s when every other moron would get trained in SAP , lie on the resume, get hired, somehow survive on the job, and make twice what an accomplished C++ programmer would make and then act like he is God's gift to womankind.
Which of course will lead to more money and greater desirability as a potential son-in-law. I am not denying that there are other factors, but unlike in the US parents play a huge part in their adult children's employment choices. Parents even expect employers to maintain the "virtue" of their umarried adult children
I was in B'lore earlier this year trying to recruit for my startup and my experience largely mirrors those of others, viz., top quality engineers are hard to find and are paid well, which is much like my experience in the Valley.
The hiring scene in B'lore reminds me of the last fondly remembered boom (please god, just one more bubble), when anyone who had read 'HTML for Dummies' could ask for and get a six figure salary. Give it another few years for the tech job market to mature in India, and companies will have a presence there to find the globally best, rather than globally cheap, talent.
on a lighter note, too bad it does not work as well the other way round. I'd like to see an Indian woman who gets a hot man and a hefty dowry by virtue of google/MS/etc :D
Vinod: >>at least in our limited experience, outsourcing to India didn’t work out.
butterchicken: >>I was in B'lore earlier this year trying to recruit for my startup...
Small companies in the present-day scenario are better-off by not going to the open-market to hire people. They will get poor quality people without staying power. They are better off hiring someone they know, a friend's relative, a relative's friend, a cousin, neice's fiancee, etc etc. They can convey in a personal manner as to what the expectations are, and they will usually be met. Turnovers will be minimal - if any.
Of course, once they grow larger in time (3+years/100+people), they will have to go to the open market eventually, and face the problems Vinod describes.
M. Nam
Captive BPOs have only been successful in large companies. Most small companies have achived economies by outsourcing to third party vendors like Infosys, TCS, L&T etc. Important to note that the bigger Captive BPOs such as British Airways WNS, GECIS etc. have been spun off in the past. It may be economical for start ups to work through third party outsourcing channels in the short run.
Hey.. all you lovelies working at google, you can have me and my daddy's jaydadad as dowry anyday. Just help me with my coding in the night, I know how to cook too!
dude lucifer, what you said is basically a very trivial thing. Any person that is single would naturally care about making themselves look better to attract potential mates, and the job that one holds is quite naturally an important part of the person's profile. So, stop belaboring that point so many times as if its a critical insight from your sharp brain on the subject matter
chachaji,
Its so specious of you to include that tidbit about tisco stopping recruitment at IITs as a pointer to their low standards. tisco could have stopped recruiting for a variety of reasons. I'm guessing it would be far too haughty of them to simply proclaim that iit grads fall below their standards. (Its possible, though, that the standard of those who would be willing to take up their job offers might not be satisfying enough for them)
oh, and apologies for my random insult to lucifer
Absolutely. Whereas application outsourcing of established applications will continue to be offshored because the numbers will continue to work in favor of offshoring. No arguments with some of the observations on quality etc made here but the fact is that there is still a huge market for offshore/outsourced services
Random- I'll ignore your insult. Do people seek jobs that maximize NPV across all cultures ? Yes of course. What you have failed to comprehend (I won't seek a cause in nature or nurture), is that people oustide of the industry (i.e. prospective in-laws, parents) don't have all the information and make NPV calculations based on limited knowledge. And that these outsiders play a huge part in the decision making of the average Indian twentysomething in a way that they do not for their American counterparts. Mummi/Daddi will explain to you, wokay ?
For all the talk about Indian technology innovation, risk aversion manifests itself in quantifiable ways (e.g. the hundreds of millions in India earmarked VC funds that are now being redirected from non-existent/poor quality Indian startup deal flow to "sure things" like services, hotels & infra)
All I am saying is that 1) for a guy out of college, marriage is the last thing on his mind. 2) Parents hardly have an influence on the the choice of jobs. If anything there is a lot of peer pressure. 3) Choice of job is based on a number of dimensions - marriage is definitely not the top-most for most of the candidates. (This I speak from my experience of two premier academic institutions and 8 years of watching a lot of people entering the job market).
"Do you frankly believe that a normal educated guy, in the US or India, seek jobs to get a bride?"
Why does any guy anywhere do anything if not to get the girl?
Some counterpoints
Cost: This talk of rising salaries is extremely exaggerated. In most IT biggies like Infosys, Wipro, IBM, 60-70% of the employees have less than 2 years experience, and would be getting paid about Rs 2-3 lakhs a year (about $5000 to $7000). On the other hand a similar graduate in the US would cost a minimum of $60000. Obviously there is a huge arbitrage opportunity here and not going to disappear anytime soon
Churn: Startups may have 20-30% churn, but most established biggies claim they have less than 10% churn. Most engineering classmates of mine are still working for their first company, and its been 3 years now
How condescending to think that getting a good dowry is the ruling principle of all, or even, most, guys deciding on jobs. Perhaps this is the chance those guys have to escape a lower or low-middle class existence, and they really don't want to fuck it up with a startup which is likely to fail as most startups do.
Any data here? And since you said 'e.g.' perhaps some other examples to shore up your point?
:-) I concede to that.
The "problem" of increasing Indian salaries has been brewing for a while. As somebody points out, the Indian system churns out a large number of college grads, many of whom have had only a mediocre education, and despite all the training systems etc. that the companies set up, they are running out of qualified employees to hire. In fact, many of the Indian outsourcing giants like TCS, Infosys, and Wipro have now started looking at getting into the Chinese outsourcing market in a big way. In these companies, the Indians get to be the bosses, and the Chinese graduates the coders.
"Random", louiecypher is an extremely perceptive, articulate, single, eligible male (except for his libertarian leanings, but nobody's perfect), there is no reason to call him the devil or insult him in other ways. I can say from personal experience that name branding is a big deal in India, when I went to India after I found a job, I got a lot of questions namechecking the top companies, and polite murmurs when I told them the details of the startup I chose to go to. I think this was way before marriage was on the horizon, or maybe, this is why the sun set on that idea (notice the genius continuation of the horizon analogy?). Who knows?
Don't know about your company but someone I know recently went back to start an offshore center for a EE startup. Dude's constant complain is that his company does not provide any of the risk based benefits like lucrative stock options that one gets when one goes to work for a startup. Thus neither is there the stability of a big company nor are there the benefits that may come if the risk pays off. There are only so many people he can find for the lure of 'high quality work'. Needless to say, masses in India have not forgotten the pre liberalization doldrums and thus job security is still important to a lot of them.
For that matter, DBDs who come here still go for companies like Intel and Microsoft though the work there is usually shite - all for the stability aspect. Sure the problem is exacerbated by the immigration rules...
Louiecypher -
You may have a point, there may be cases/communities where people think more from the marriage market perspective. However, as a general trend I am not as sure that marriage is THE concern for a brand name job, it might at best be a passing concern.
Also, the problem with inflationary salaries is definitely there. However, praise the Lord of Market Forces and put your trust in Him (or is it a she!!). If this is a bubble, it will burst. My guess is that it will just stabilize - the people who are good and are indeed at the same productivity level will demand top notch salaries, probably a couple of notches below American salaries but not too much below (there are plenty of returnees these days who are quite qualified and productive - also, think IBM, Intel, MS, Google research labs in India) and there would be the true oursourced work masses who will not be able to command as much, but still the work will be there and the salaries will reflect the true worth of the work. People will be paid based on the value they bring to the chain - be it in India, China, Europe or the US - globalization will work both ways.
Fresh graduates don't know/realize how appealing startup work is (actually they have no clue at all). Even if they know about the startup, they are not willing to join some no-name company. You can offer them 50% of Silicon valley salary, they won't join a startup. Getting a placement is a big deal when they are in college. They like to brag "Machi, I got placed in Infy da" and start courting the hottie (or not) placed in same company from his college. Name-brand hiring!
Once he is there, he has to fight (compete is a weaker term) with 10,000+ people to get his annual rise. If he doesn't get it, he moves on. You can't do this easily with startups, right? If a startup wants to keep the trained, they have to hike the salary. There goes you cost factor! About quality, there is no way any startup can attract and keep the best talent (all within budget). Sometimes, few top students in name-brands soon realize the situation in service industry and look at startups. Now, the startup needs to pay huge salary without knowing when he would quit.
On a lighter note,
Srinivas/Camille/SFGirl/louiecypher,
Latest I hear from the marriage market is this: "Boy works for Cisco/MSFT/TI/GE/Google/Infy/TCS/Wipro/etc" category beats the crap out of "Boy works in US for XXX earning six figures". Supply Vs Demand, again. Too much demand for "educated, good looking, working in IT" gals. Gal wants someone who can earn big bucks - in rupees and dollars - when opportunity comes. Oh, she wants to meet her mom twice a week. How can you do that in a startup? Imagine conversations like this:
Person1: Payyan entha company la velai paakaraar? (Which company is the boy working for?)
Person2: Infy/TCS/Wipro/other biggies
Person1: Oh, nalla company.Foreign poga chance irukku appo....besh besh. Jaathagam irukka? (Nice company.There is chance to go to Foreign. Do you have horoscope?)
Imagine this
Person2: Riya/Roundbox
Person1: enna athu? kelvi padathaa company yah iruke! sambalam nalla kudupaanga illa? foreign poga mudiyuma? (What? I haven't heard of that company. Do they give nice salary? Can he go foreign?)
Truely this is what is happening. I was there!
Vinod i think its just that your company and Riya you mentioned did not know how to play the outsourcing game.It is well known fact, until you have huge scale outsourcing will not work for you, no matter in which country you go. you should be knowing currently its a employees market and not employers another aspect of ECO 101 you did not mention.
As for the quality of workforce its not even and nor is the work which is being done all of high quality so companies need every kind of person from high end to low end.
Also, to address al beruni's point, this is a real concern. I think the Indian upper middle class has definitely become disproportionately wealthy thanks to offshoring in the past several years, but my understanding is that there has been a real recent focus on improving manufacturing and competing effectively with countries like China on things like textiles. Gujarat is one of the states where the infrastructure (roads, power, water etc.) is solid enough to support these industries. If this kind of manufacturing sector really takes off, I think India will see a much more broad-based rise in the standard of living.
Munjal!!! The number one man for Khurana sahib stands in the way of Khosla ka Ghosla again.
Butter Chicken: are there any other sources of capital beyond VC for R&D intsensive firms that won't show a profit beyond 5 years? Can one go to Citibank? If not, then I would say that my statement is well supported by an analysis of the portfolio investments made by VCs with India ops. And anecdotally by the calls that I get from my friends at VCs and corporate venture arms who ask people like me to come over to instigate deal flow because nothing is happening organically locally. And the number of patents filed by Indian tech firms (i.e. as opposed to MNC subsidiaries based in India) is miniscule.
What's the difference between Butter Chicken and Chicken Tikka BTW ?
SFgirl, this is not at all uncommon. Lots of men in india marry women they even consider ugly for
a) money
b) "foreign chance"
Apologies if I overplayed the "Marriage Attractiveness Index" thing. But I don't back down from the disproportionate influence of uninformed parents theory.Not until we can send an actual social scientist like Camille out to do a proper study.
Yeah but what money is the ugly wife getting from these men? As you state, the men are marrying them for money. And I bet the guys who marry these "ugly" women are not "all that" to begin with. At most they are probably just ordinary looking, I doubt many would be "hot".
Rahul - it is taking off, recent numbers put Manufacturing growth at 10%
On a related note, India is expected to be the largest importer of foodgrains in the world by 2011. Agriculture growth was just 2% in recent numbers. Unfortunately, a big mass of the Indian workforce is still in the agro area. Till this workforce gets absorbed in the manufacturing workforce which will take some time , a lot of people are getting screwed. Inflation is rising rapidly but the incomes for this mass of people is not. The Govt. recently announced big plans for targeting agriculture growth, unfortunately their heart is in the right place but not their approach in attacking the issue.
I followed Munjal's Blog for some time now and did read that article about their decision to move operations back to the US for cost reasons and found that interesting to say the least...
My fulltime job is at a company called Sapient and 3,500 of our (5500) staff is in India between Gurgaon and Banglore - we're actually rated among India's top employer's among technolog firms. I think we moved a bulk of our operations over there during the dot com days to stay afloat and we use India for everything from Helpdesk to HR to a ton of project work. Almost everything we do here touches people in India. I am curious how this shift in wage increases are going to affect us in the long run, and our profitability.
on another note, I have had a lot success outsourcing high-end creative talent to India, mostly Mumbai...and I think thats been an underutilized channel of outsourcing as most desi's aren't encouraged to go into artistic professionals...luckily, my parents are on the cooler side of things...
louiecypher, i think you underplayed it if at all. For there are a lot of implications of such an index.
what if startups, as perks, also included matchmaking services, or even entire brides. Join Roundbox geta bride free or something like that. Where to get brides -- why outsource that as well. All these villages, and somebody was talking about manufacturing a few comments up and female infanticide a few threads up.
All problems solved in one stroke. People don't trust capitalism enough.
She'd love to do it, but her mummy-daddy don't want her to waste one year roaming around India doing this survey.
Great point about agriculture, and yes, I brought up manufacturing, because in its absence, you are going to have wild disparities between purchasing power of the majority of the people, and what goods and services actually cost. I don't think this new cause for class struggle has explicitly become a dominant aspect of Indian society or politics yet (except indirectly, when the BJP's India Shining campaign slogan fell flat in rural areas and they lost the elections), but it will become more and more of a factor as these gaps grow.
Butter Chicken and Chicken Tikka BTW ?
I am presuming you are referring to Chicken Tikka Masala.
Butter Chicken is a Royal Indian dish. This buttery delicacy is usually to die for. Chicken Tikka Masala is a cheap English imitation/invention with reliance on ketchup and cream. This abomination has now made its way to the US.
My own experience isn't quite that stark. I know quite a few guys in Bangalore who are working in startups, are starting their own companies, etc. And I am talking about hard-core engineering rather than pure BPO. Of course, the number of startups in India is nowhere near silicon valley's numbers, for various reasons which will probably surface in another thread soon enough ... :-) Perhaps the reason why VCs cannot find deals to fund is because they aren't looking in the right places, or aren't making themselves available easily. Remember that engineers in Des still do not have too many examples of 'couple-of-guys-with-an-idea-raised-n-million-and-went-IPO' to follow. In any case, I would hesitate to talk be dismissive in the style of - 'for all the talk of tech innovation etc'
I do take strong issue with your assertion that patents are a good, or even reasonable, measure of innovation. If OTOH you are saying that Indian companies have not learned how to play the game by not filing for enough patents, that may be true.
Gabroo Punjabis eat butter chicken (and wash it down with IMFL whiskey), CTM is for effete Britishers ... :-)???????????
One day the world will figure out that humans can't digest plastic and micro-chips and we'll all get back to agriculture again.
conclusive evidence of the above person being a great thinker
Yo brotha! You got some numbers to back that up? And if you do, we'd rather see numbers of the kind 'patents per employee' or something, not absolute numbers to account for the size of the industry. Plus, a well made point is that the companies might just be waking up to the patent phenomenon and some might consider it an avoidable expense. India is still new to the patent culture.
hey, conclusive evidence of someone being a great conclusive evidencer.
Hmmm...given the emerging female deficit, entire brides may be hard to swing. Perhaps polyandry marketed as "Pandava Marriage" will solve the problem without turning saffron balls red with anger or blue without "creative outlet"?
We might need to outsource this to Ukraine. I don't know about you guys, but I get tons of love mail from Ukrainian women I don't even know. My dravido-lemurian man musk beckons across the steppes of greater scythia...
Haha yeah, I just realized it first hand upon reading this amusing example of what I presume, came out of the "creative outlet" of louiecypher :P
louiecypher, people have already beat us to marketing polyandry. it is apparently the world's most ancient start up.
By "butter chicken," are y'all referring to chicken makahani?
Yes.
I don't know what's in the air, but the repartee on SM has become very delightful (if a little snarky otherwise). From "barby girl" Divya to Manju's swipe at Salil:
At least on the web, your wit determines your playa quotient, rather than your job with Infy or IBM.
A question:
Lots of people pointed out the inflationary salary trend as well as the long-term equalization of factor prices among countries well-entrenched in global trade. Some argue that the trickle-down effect will eventually make the entire economy better-off (increase consumer demand/consumption leads to more job creation and so on, sort of a Keynesian story), while others will say that the trickle-down effect is slow/minimal, that the rural sector is entirely excluded from the job market because of various infrastructural bottlenecks and that the upper classes are (in countries like India) very adept at cronyism and preserving their monopoly on the command of resources. In fact, some economists have tried to show that in India, the concentration of wealth has increased and the wealth disparity has increased even between the very rich and the well-off (i.e. the middle classes).
What do you think will happen in India (especially the more knowledgeable social scientists among us) in the next 10 years: upward mobility beyond a secular rate of growth or a concentration of wealth scenario?
>What do you think will happen in India (especially the more knowledgeable social scientists among us) in the next 10 years: upward mobility beyond a secular rate of growth or a concentration of wealth scenario?
LeftyProf has been writing about this... it seems like the bubble has to burst sometime, just as it did hear. It can only go so high before it no longer pays to go 'offshore', or another shore is cheaper...
Camille, but 'ghee'o' is the essence of 'saada' punjab, right after patiala peg, that is. But just for attempting to transliterate 'ghee'o', your effete card is revoked ... :-)
I would not claim to have much knowledge as a social scientist or an economist since I am neither. But let me take a shot still. Economic models predict that when a country goes through a period of rapid economic growth, there is an initial phase of increased disparity and concentration of wealth (this is where India is today). This is when there is creation or wealth but there has not been enough time for it's disbursement. However, the models also predict that gradually as long as the wealth stays put in the same broad geographical region it gradually makes it to the market (think Ambani building his mansion, someone gets richer - that person then spends his new wealth and so on). Thus over time the trickle down effect does indeed happen, how can it not unless you are kanjoosimal and lock it all away doing Puja in front of the tijori. However, how long it takes for this wealth takes to make it's way back to the market depends on not only the social situation and spending habits but also on Governmental policies, taxation, etc. In India we have not seen much in terms of Government efforts for reducing the disparity. If the disparity increases to too large an extent or the time it takes for the disbursement is too large, there is a very real danger of social unrest which I think if not rectified, India could move towards. This is what rahul breifly alluded to a few posts back. Thus while I am not too worried about the disparity, I am a little concerned with Govt. measures for wealth distribution. For eg, in India a salary of 10lakh or more I think is the same salary for everyone whether you make 10 lakh or 10 billion. Similarly, there are not enough welfare schemes, job creation is only starting to happen in low end skills, etc.
As is always the case, there are economists who disagree with this model but to me it seems quite rational when you come to think of it. Where would India go - I guess it's a little early to say, depends on what the next election brings to the center. Some acts like the NREGA are quite profound in the impact they can create but so far leave a lot to be desired implementation wise.
I mean Taxation is the same, I think. Someone who understands Indian tax laws better could throw light on this.
Ardy,
I think the highest tax bracket is 30% and there is a 10% surcharge if an individual's salary exceeds a certain limit. I can put more details later.
This is not an analysis of India, but an Israeli economist has studied career choices of young men w.r.t marriage:
And from today's dispatch from the Annals of Completely Random Research:
"Mustache Fashion Covaries with a Good Marriage Market for Women"
louiecypher, that's not nice. You know Vinod is highly marriageable.
Vinod has nothing to worry about, I've never met the guy but I doubt that he will be going on a wife hunting safari in the desh anytime soon. And desi parents in the US are different, working for MSFT/Cisco (and probably Google two years from now)here is alot like being a "B" student. They know startups is where it's at
Even though I work with a startup that doesn't even have the prestige of being in tech,
I told my mommy that in terms of women/girls/"damsels" (to use the term from Dalrymple's "City of Djinns"
from the "old country," I was only interested in Stephanians--presto, still a bachelor. ;-)
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I'm with louiecipher. How can one anyone, esp. male (in a place like India) not be mindful of how they are going to look on the marriage market when they make their initial career decisions?
More generally, in all cultures, success is sexy and everyone understands that at some level. This explicitly or implicitly influences many career choices of singles. And when I say sucess, I don't necessarily mean monetary success.
Companies which come to India "just" for saving $$ don't do well in general. The quality of employees you get is proportional to the salary you are willing to pay them. From my personal experience companies like TI/Google/MSFT/Veritas which have done well in India are the one who are in India not just cost savings, but for the talent. There are people who are very much willing to work in a startup, atleast in IIT's. But you need to pay them at least as much as what the established companies are willing to pay them.
#73 Kurma:
success is sexy and everyone understands that at some level. This explicitly or implicitly influences many career choices of singles. And when I say sucess, I don't necessarily mean monetary success.
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Absolutely--seizing power also helps. Send lawyers, guns, and money, baby!!!
"I'm with louiecipher. How can one anyone, esp. male (in a place like India) not be mindful of how they are going to look on the marriage market when they make their initial career decisions?"
Ummm maybe not. I know so many brilliant students who choose to study pure mathematics and theoretical physics over MBA and S/W jobs.
Hey Binoy ... Sapient Bangalore reprazent !!! A shout out to all the other sapientoids :-)
And whats with all the desh hating? I think most of the Indians would choose to stay in India if they got the same dollar pay converted into rupees. That is a lot of money. I mean even with the current wage levels the attraction for permanent immigration or relocation is waning. Most of my friends and colleagues have no intention of leaving the desh. The current model of getting a chance to go onsite and save some moolah and comeback before you get homesick works best for us. There definitely is a great interest in being well travelled but eventually we all want to come back to our "home" office because we love it warts and all.
When talking about the woes of startup company's ability to hire in India, what is the value-proposition that it is bringing to the new hire? In the US some of the reasons to join a startup is to learn a lot of new skills in a short period of time along with the hope that the stock options will materialize into something big to be an instant millionaire. I am not sure if they offer such incentives to folks in India. If they are not provided such incentives, any graduate would like to join a "Name-Brand" company to increase his/her marketability in the future.
In addition, we are talking about global capitalism. If cost was the initial driver to go to India, it will correct itself if such incentive does not exist in the future.
Physics or Math careers make no money except for academics which usually is non research based anyways (or I guess tuition classes). Thus this does not hold if you are supporting the belief that certain career choices are made keeping prospective partners in mind. If that was my sole intention, I would choose something with a large market value, not something considered eccentric and financially non lucrative.
@kurma
When someone decides to make a career in Math or Physics, then the prospect of attracting a better mate is hardly on people's mind. I was trying to point out that there a lot of people in India who do not consider potential marriage prospects while choosing their careers. And I choose these two subjects as an example because if you are going into these fields for reasons other than genuine interest, then you are pretty much hosed.
A little pompous and self congratulatory this... but since KPO was not mentioned, this may be relevant.
was wondering if any of you have connections with the SalaryBase.com folks. Would be rather interesring to see the US tech India vs. US stats on some key positions
"You might want to take a closer look at who's the most in demand on Wall Street nowadays. "
Didn't I say Pure Mathematics in my previous post? Oops My bad.
Firms like D.E. Shaw primarily hire people with purely Mathematics background, the highest paid hedge fund manager James Simon has both a bachelors and Phd in mathematics earned about $1.5 billion I think in 2005-2006. Mathematics is in high demand like Kurma noted.
Sure Mathematics in high demand, but not really in large numbers like those with software skills. I am not arguing that a few brilliant graduates make it to Wall Street. But what are the odds of the average Math graduate making a ton of cash akin to those in software??
And for those engineers who crave the big bucks on Wall Street schools like Columbia and UC Berkeley offer graduate programs in Financial Engineering. A lot of the financial engineering students I know are students with EE and CE backgrounds.
Yes, pure physicists and mathematicians are very employable by virtue of being hella smart. DE Shaw is paying these guys to work as applied mathematicians/quant jocks...not explore something because it is "beautiful" as pure mathematicians are wont to do. I have friends from school who did PhDs in theoretical physics and now work for strat consulting firms making pretty, pretty powerpoint and getting paid $300k a year. The question is what are the employment prospects for people in their fields of study in India. I would contend that up through the 70s there would have been less parental opposition to pursuing pure math & physics because engineering would not necessarily have provided a significantly better livelihood. My earlier comments regarding risk aversion were specific to the choice of large public company over startup in India
I will make pretty powerpoints for 300K, jokes apart I was responding to spark's comments about people choosing mathematics as career options being hosed.
its an awesome arb....be d*mber and make more $.
I am not sure if it is necessarily be dumber or dumb down your knowledge, whatever it is it is lucrative
the beautiful thing is that you dont need a phd in physics to do those jobs. you can be a d*mb@ss and make a d!sproportionate v!g for $h!tw*rk.
Puliogre, man, for g*d's s@k3, use something other than shift and the top row of keys :)
@ 87 by louiecypher
well considering this blog-post about outsourcing and the above comment abt physicists working in wall street here is an interesting news article from the news-tab abt the concern of physicists' postion being "outsourced"
where did my comment go ? initiallyshowed up but later vanished!!
For a thappal in the back room of the bunker.
I am vindicated by this Economist article, marriage marketability hampers startup recruiting. Stuff it Louiecypher naysayers !