In India -- Looking Abroad For Cheaper Suppliers
Recently, I've spoken with a number of people who have complained about the rising costs of skilled labor in India. And along with booming salaries have come sky-rocketing rents (in Bangalore, rents can be higher on a square footage basis that Silicon Valley). Perhaps this explains in part why Tata Motors is looking offshore to lower its supply costs. According to the above-linked news brief, Tata Motors also is said to be looking ... at countries such as China, Thailand and Russia to source components at the most competitive prices without any compromise in quality." In addition, I've also heard stories of late about Indian BPO firms aggressively looking to ramp up operations in lower cost countries (to complement their own centers in India). Later this year, I look forward to making it over to India to investigate first hand how labor and other factors are driving Indian companies to investigate global sources of supply and labor.
- Jason Busch
Tweet
TweetBacks
I moved my blog to http://www.manojranaweera.com. Appreciate resetting any links that you may have.
I am also taking my blog to the next stage - and looking for sponsors - appreciate any advice you can give.
I am very much interested in following your forthcoming visit to India. It will no doubt be interesting. I outsourced to Sri Lanka - hopefully I will be able to share my experiences in not too distant future.
Sri Lanka suffers from significant labour shortage when it comes to software engineers. However, to reduce this impact private institutions have been set-up - hopefully demand vs supply will iron out in few years - flooding in the industry with too many engineers will also have a negative impact.
The free trade agreement with India has wiped out some of the local small industries, especially farming, when it comes to cheaper goods.
As you will remember from our discussions at Cellular One ballpark, my recent trip to India drove home this point for me. The cost of talent is going up significantly in India every day. A 4 bedroom townhouse in Gurgaon is close to a million, yes MILLION dollars. Many of the service providers in India are themselves lookiing to outsource. Therefore, our advice to our clients is that instead of developing competencies that are specific to exploiting cost arbitrage opportunities in India or China, they need to be thinking more strategically and developing competencies that allow them to identify and exploit these opportunities acroos the globe. In addition, focusing on just cost opportunities is a short sighted view. We are in the process of developing a new mental model around this and will be hapy to share it in a short while. I am headed back to India in early March for another client meeting and will be happy to share more after that. By the way, let's coordinate our trip to India and I can take you to all my old haunts.