http://pragmaticoutsourcing.com/2009/03/05/japanese-car-invasion-vs-offshore-outsourcing/
I myself don't know anything about cars, but I can agree fully to this article where it talks about outsourcing to India.
Though in general the US and European attitude of practical managers towards Indian outsourcing is not very positive, one can hardly find literature which explicitly states the problems.
This article describes exactly what I observed here in India in the past years.
Let me explain my situation ...
As a small typesetting company mainly composing scientific books and doing prepress related tasks I have been establishing relations with Indian companies from 2000 onwards. I tried to outsource part of my processes and never got any (profitable) success until I decided to jump deeper into offshore outsourcing end of 2004. For me and my wife the time was right: our youngest kid was almost 18 and the others were independently living. Another big investment I did in Belgium early 2000 was reaching its technical, financial and commercial endphase. I was in the right mood do start something new and making offshore outsourcing work for us sounded like a lifetime challenge to me.
So I left Belgium and went to India. I had some contacts there and got an arrangement with an existing company to slowly startup my business in their offices.
We were only a small typesetting company, so we had not much to do with legal contracts. All agreements were done in a informal way and on the basis of trust. Nevertheless after two months already I decided to stop the co-operation with that company. Some of the observations were:
- the hierarchy in the company was so important that most of the employees forgot what they actually had to do: producing value for their customers;
- attrition was more than 30%;
- functions and jobs were created for everything - from bringing coffee to polishing the boss's shoes;
- internal company politics where more important than the value created for the customer;
- my contactperson had changed companies just before I arrived, without informing me and this new company didn't know anything about my kind of business;
- the business was essentially: "buying labour at 200$ a month and selling at at 30% less as what it would have costed in the US". This often resulted in a multiply factor of 1000% (!). I pity all the big corporates having accepted these deals ... just for the sake of - often only virtual - cost savings;
- I was 45, having worked 20 years in my field, I considered myself being a senior only 4-5 years. In this company however, young guys below 30 were already considered as seniors ...
- I got a lousy upload/download Internet speed of 3 kB (!), while I was transferring Gigabytes of data to and from Belgium. It took me 6 weeks and several online conferences with the American manager to get finally a "good" speed (their words !) of 6kB (!).
This list contains only a few issues of course ...
I quickly realised that I would never feel happy in such an organisation. Neither I could understand that such companies are able to face the high-performance, low-cost, highly automated Belgian companies in our sector on the long run.
So I decided to take the long route.
I've set up a company myself and have stayed in India very often and for longer times to learn the culture and mindsets. I thought that to achieve long term results, one has to begin with understanding the mindsets and have your own mindset understood by them.
Nevertheless, these early observings still stand.
Now I am 3 years older and a little bit wiser and managed to build a company with 25 people here. Productivity of my people here in India is still lower compared to Belgium, but already very often I get the quality I want. And in 3 years only 1 employee deliberately has left my company (when I am in a bad mood, I tend to think that I'm paying too much). In other words, I could bring attrition down to zero.
I find my main task here is still "empowering" my employees so that they learn to trust their own thinking and judgments instead of blindly executing orders from me. This is a new experience for most of the young girls and guys entering the labour market in India.
I'm afraid one cannot do this if one suffers from a big ego because you can only reach this by keeping a low profile yourself.
I still often feel that Indian companies - especially now with the slowdown - are taking their own wishes for reality. Presenting yourself as the best is more important than actually trying to become the best by improving the workprocesses and making the employees responsable for their jobs. Admitting errors is still not done here. And the lower the employee is placed in the hierarchy, the harder he has to work (and the lower the salary) to please and contribute to the status of his boss.
I now stay permanently with my wife in India, even sold largest part of my business in Belgium to be able to focus completely on the organisation, quality and efficiency of my company here.
It is a constant fight ...
I would like to add here also about the wonderful experience it is for us to work with Indian people and being able to meet their culture. But that is not what that article points to ...
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