India's competitive edge

India is known in the world till the recent times as the most competitive country for outsourcing due to currency and labour arbitrage.
But how long can we sustain this advantage is the key question that I have today.
Today India is fired by the passion of Entrepreneurship, which is a good sign of the growth for the society as more and more jobs are created and people become employed sooner. Lets see below the scenario one such entrepreneur faces.
I had a visitor today whose cousin is having a manufacturing ancillary unit for automobiles and this person was sharing the how his cousin's entrepreneurial venture is going.
This young man has lot of orders and he has his customers - all leading brands - picking his company for specialized services that they require. Oh! what a enviable position - was the first thought I had. I wish I could be in his shoes - here I run or rather fly ( already crossed 100,000 miles with Lufthansa since this year beginning) burning up a lot of air travel time, money, physical strength and run behind my clients for just a small order....... But look at this company being pursued by the clients.
Immediately, my visitor said STOP. STOP.. Dont start your envying act. Just wait to hear the true situation. So saying he continued .....
To meet up the extra demand, this entrepreneur went in for 2 more expensive set of machinery. and the eager question from me was - That's great So capacity expansion in answer to demand - What a way to Go!!!
Once again, my visitor cried STOP....
The machines are lying idle gather dust!!!!!
What ???????? I asked. He answered
My cousin dreads to go to his plant on Monday morning as all the customers procurement managers will be waiting there for me and there will be lot of calls from the Production manager because I cannot deliver on time.
Why??? When you have extra capacity - was the next question. He answered......
Because of 2 things ..........
1. Power Problem - I interpreted he can always go in for Generator ... Ha..Ha... came the reply. Doesnt he know this. My cousin cannot run these machines with generator because the output that comes out from the generator does not sit well with the imported machinery and the precision is lost in the final product.
Then he can go for another shift .. This was me... with all my eagerness. My visitor replied... Sarada - he is already paying a penalty for drawing excess power and so the question of another shift is ruled out.
I didnt have any answers.
My visitor continued........ Sarada you haven't asked what is the other problem. Now I know better than to preempt and kept my quiet allowing him to continue. He said
The second important constraint is the Labour problem. My cousin is not sure whether the people who operate the machines will come on Monday and it is becoming difficult to get new people.
Now I can nod very wisely, because we are all facing the same problem. Only thing is we are working with different collar - white or blue - today the demand is more than supply and that is where the problem arises.
From this year beginning, I am fighting for my survival, because of attrition and mind you I am not alone in this. It is with regret that I have to say that I have lost few projects because of No shows & attrition. In fact, during the downturn, we made a policy decision not to let go any body for the sake of downsizing, but see now how these people are hurting us when we need them most. The whole media was making a hue and cry of the downsizing effect that had affected so many people - how they were treated, etc. But the same media is silent about the pains of the companies when people switch jobs putting the companies into jeopardy.
This is where our labour arbitrage goes down as we need to incur cost to fight attrition, which makes our cost go up. In fact, the eastern countries are growing faster than India, because they have no overheads in terms of attrition control, accent training, transportation cost, etc. There are lot of opportunities that have gone their way away from our country, because they are able to give the services at half our cost. It definitely hurts.
So how do we overcome these 2 problems which are beyond our circle of influence is what the thinking that I was left with when my visitor finally left.
Anybody have any answers?

Comments

D. Chandramouli said…
Just a thought. People leave companies either because they are not getting emoluments that match with the market. Second, the work environment is not conducive enough for them to continue. But, mostly, a research study said that people leave because of their immediate supervisors. When I was employed in Ashok Leyland decades back, there was an instance of an Accountant leaving the company. The British MD asked the Finance Director what was the reason - apparently, Accountants in similar cadre were getting higher salaries outside. So, MD ordered that salaries of all Accountants in the Company would be re-adjusted forthwith. As a long long term measure, he ensured that HRD hired an outside consulting firm to give us periodic information about executives' emoluments in the region in similar industry, and the salaries at executive level and above were revised accordingly whenever there was a Labor Union Agreement. Of course, each firm has different set of problems on attrition. Probably, IT industry in India is uniquely placed where the attrition is a definite threat. By the way, I have off and on reading your blogs - I found them very interesting.
April 13, 2010 at 12:16:00 AM PDT
Post a Comment

Popular posts from this blog

IT SME FORUM

About 7 months back a group of Entrepreneurs from Chennai who had a common thread of running their software companies got togehter to form a cohesive group - The IT SME FORUM - as a Strategy to accelerate their individual growth through synergy. Each one of these entrepreneurs are successfully running their software companies fighting individual battles to keep the company up and running, maintain a steady growth rate, increase their customer base, etc. Running a company in India is not a easy task - it is literally getting pulled in thousands of direction and believe me - A business leader is supposed to concentrate only on Growth - Marketing - Sales. But I have found that typically in the Indian environ, we get pulled into operations and managing to spend some time for the most crucial aspect of the business. This gave rise to the idea - why not have a platform to share the best practices, to learn how to tackle problems, get a better voice and get a big bandwidth in terms of out rea...
Read more

Giving back to Society

When I joined Rotary Club of Chennai Thiruvanmiyur , I didnt understand what changes a club can make to somebody unknown. Our club had taken up Adult Literacy program in a very remote village near Pondi , which is quite far away from our city. While the project objectives were good, the distance and the way the then President had taken this project unilaterally, made all of us not to think too much of it. But a Project is a Project done with a Goodness. This is a such a remote village, where the main occupation of the people is fishing in the nearby Pondi reservoir . That is also halted when the Krishna waters comes into the reservoir . When the program was started it was with reluctance that the people joined. The President came up with the idea to give one kg of rice to the people who are attending the program, whenever he visited them. That became the great motivator as for people who dont know when their next meal will be or where it will come from - it became a boon ...
Read more
Thanks to Aravind who wanted me to write about the Temple at thiruvotriyur in chennai. that was one of those days when you get up early in morning and the whole world looks very frustrating and you dont know what to do. it became a God send message to me. So started my preparation to go the temple. I reside in the south chennai and the the Temple is at Thiruvotriyur in North Chennai. and the travel time will be more than 1.30 hours. So we started at 10.30 and reached around 11.45. The temple closes at 12 noon after the mid day pooja. What a divine visit it was. I came back so calm and filled with energy. This is a Shiva temple and the God is known as Tyagarajar, Adipureeswarar and Padampakka Nathar. The main deity is said be in the form of Lingam formed of Mud which is covered with Golden cover sheet. Once a year during Karthik Poornima, the Gold cover is removed and the necessary abishekam is performed and the once again the Lingam is covered with all the medicinal materials. His conc...
Read more