I always enjoy reading Nandan Nilekani’s views – he is clearly one of the most articulate CEO's in the global IT industry today ( not necessarily just the indian headquartered companies) and am amazed hearing him/reading him when he responds to issues on the fly with so much conviction, depth and choice of words. In the recent Q1 analyst call he was on the feet in his response to rising wages and how this might not be a competitive disadvantage to Infosys, He said in response to a query that it’s important to understand that what is happening here with systematic values of Infosys are coming up on different facets of our business.
1. First of all, I think the size, brand and scale is building one barrier of entry.
2. The $100 million a year investment in training is creating another barrier of entry.
3. The compensation package is creating a barrier of entry.
4. The growth rate is creating a barrier of entry, because what happens when you have high growth rate is that you’re able to essentially spread the cost of competition over a pyramid. When a company’s growth rate goes down, then it ends up becoming top-heavy and it reflects in its per capita employee cost.
He further argues that organizations need to have a high growth rate to pay for all these things. Essentially, we are trying to create a virtual cycle which we believe will lead to further consolidation from the pack. Powerful statements - quite insightful.
I read in my return flight to Singapore, the Financial Times interview with Nandan Nilekani. Jo Johnson writes that Nandan Nilekani makes clear that India’s business success is payback for centuries of economic exploitation. "The juxtaposition of India and China is a consequence of what we’ve achieved on the services side," he says. If India is creating job insecurity in OECD economies, he certainly feels no need to apologise. "I don’t think that a high standard of living is an entitlement," he says….. "I don’t think the world can live with everyone driving an SUV. Something’s got to give. It’s just become more competitive. If Indians and Chinese can work 80- 100 hours a week and they are part of a global, fungible labour market, it’s going to have an impact on living standards in the west."….."I believe that the tide has turned," he continues. "Two hundred years back, India and China were 50 per cent of global GDP, but both, for different reasons, opted out of the race. In China, they turned inwards and in India we had the empire. The next century is an opportunity to redeem some of that: the flat world has created a unique confluence of circumstances which will have a huge impact on all our lives." Without getting offended - read his interview along with this businessweek cover story talking about a wider theme.
I also liked Nandan’s definition of Ideas Entrepreneur – while referring to Tom Friedman. He says, Tom Friedman is an ideas entrepreneur” and adds. "Entrepreneurship in business is about a guy who has the best idea and acts quickly to get his product to market. He's the intellectual equivalent." No need to worry guys in the US - offshoring is today an industry still in its infancy, with more than 90 per cent of the addressable market yet to be tapped and the US market is quite vibrant and flush with opportunities. After all US companies involved in offshoring are seen to be witnessing extraordinary productivity with the available resources. As David Kirkpatrick wrote sometime back, more than 90% of the world’s population growth through 2050 is projected to take place in poor countries & the US is just 290 million in a world of 6.4 billion people. Opponents of offshoring idea need to start thinking harder about what that means.
Category :Offshoring, Emerging Trends