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Tuesday, February 27, 2007
John Hagel shares his perspectives on the future growth and opportunities for the Indian IT ecosystem. I could not attend John’s session in the Nasscom summit- I had to be in china for a different meeting. John summarizes his perspective on the growth possibilities and correctly identifies that the continued growth of the industry hinges on the ability to access and develop talent. He highlights the issues that the industry is grappling with - turnover rates ,wage rates & emerging competition from other low cost locations. The responses to these issues are on a wide-ranging front - The Indian IT services continue to invest heavily in scaling their recruiting and training efforts, increasingly branching out and establishing facilities in second and third tier cities in India to reach a broader pool of talent, including establishing development and operations centers in other low labor cost countries. Indian firms are also investing in developing more value added services to generate more revenue per employee and in general are focused on operational excellence to enhance profitability per employee and to become more responsive to increasing customer expectations. McKinsey & Co. has come out with a report with a framework for benchmarking operational performance and found a high dispersion of performance across Indian offshoring service companies. The report highlights rightly so, that offshoring service companies could do a much better job of absorbing increasing wage rates if they focus more aggressively on enhancing the productivity of their operations. One of the interesting sidelights in the report was the finding that third-party service providers generally outperform captive offshore facilities – a point that I have repeatedly highlighted.
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