Monday, December 9, 2013

Growing pain

Global Image is that India is the best destination for software outsourcing, thanks to success stories and enterprise projects done by companies such as TCS, Wipro, Infosys, IGATE and Polaris…many more in the list. As it happens in all businesses during organic growth phase, application development outsourcing business rapidly expanded in India and many software factories cropped in all major cities in India targeting small-medium projects in B2B segment of US, EMEA and Asia Pacific countries. Furthermore, H1B Visa, US posting, fat salary package etc. started inspiring many students to sightlessly go for computer – software engineering and the result out is that we now have more than required software engineers in India.

Within the small and medium companies, it is observed that smaller companies are found less globalized than medium size companies but even for them, globalization is seen as main growth driver for their business. This is today’s a reality and considered as major milestone for growth; thanks to long time prevalent organic growth in demand for software project outsourcing to India. 

Most of such small and medium companies are propitiatory / owner driven. Majority or these business owners are technical or software engineers by themselves. They do have vision for growing their business in global offshore outsourcing business however their vision is short sited except for very few company owners who genuinely make an effort in expanding their company. They do get projects from their foreign clients but the limitation is that they have inadequate resources and expected project timelines are not client friendly with their projects. This has a bad reflection on the global image of India as the best outsourcing destination. Many of their projects are broken, dissatisfied users and dissatisfied clients are increased substantially which has started hampering the global image.

You might say that this was expected and there is nothing new about it; I agree and the point is valid but it is a “growing pain” now for most of the small-medium software companies in India. Within the small and medium company’s slot, smaller companies are found less globalized than medium size companies so they fail to understand the global buyer’s behavior and expectations. Engineers of such companies mostly come from unknown engineering college with mediocre knowledge and no experience. (This is another issue cropped up in India) They have no experience of working on international project. They may be good in English communication (particularly from South India), but their perception and approach to the project is highly unprofessional. They have simply tested few project closer (small) with the global buyers and think it is the same as treating and managing domestic buyers who always prefer "sasta" (low cost)

During 5 years of my experience with software outsourcing company, one thing I have learnt is that all global service buyers are very choosy while selecting their offshore service provider in India. Almost all of them give very high weightage to the company's capability, relevant experience, proof of it and references from their own countries compared to just the skilled labor procurement cost. By all means, development cost is important criteria however it is certainly not more important than the other parameters. Now the sign of organic growth phase is weaken and most of the clients have started demanding more for their money. It also means that they are more concerned about the “usability success” of their application.

All said and done, globalization is today’s hard reality and considered in India as major milestone for growth whether for large enterprise or small-medium Size Company and these SMEs do have a role to play at an international level.

Bhartesh Sagar
December 9, 2013

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