Hi,
        I'm relatively new.  But looks like Indian manufacturing is finally getting its act in place. There are as of today 5 manufacturing companies that have won the highly coveted Deming Prize. The custodians are the Japs themselves - the JUSE - Japanese Union of Scientists & Engineers.

        Deming is extremely difficult to win. Few companies outside Japan have got it, fewer still in the US. Edward Deming was one of the top Quality gurus who didn't get an audience in America during his time, but became a national hero in Japan and the chief advisor to its Emperor, and is credited for much of post worldwar II ravaged Japan's turnaround.

        The main criteria for the prize is innovation in Quality (which subsumes a lot of things). The important point is India has many more manufacturing outfits striving towards this. Unlike ISO, CMM, et al, this can't be bought. India may soon have the highest number of "Deming" firms outside Japan, and maybe even more than the Japs themselves, according to one analysis (as early as 2010). As a result, more and more important sub-systems (not just components) are being outsourced to India. Tata Steel, for eg, is now advising Ford on their metal(meterial) strategy/ design.

        India's software, Business Process, and increasingly manufacturing, successes have to be taken in Systems Perspective. One of the unseen / unintended consequences that are positive is India is gaining R&D competencies at somebody else's expense. Second, after some time of outsourcing, the original process is forgotten in large part by the original process owners. There's a discussion about "knowing the talk" v/s "walking the talk." The two are not the same.  Soon the clients become addicted/ locked-in, goes the reasoning.

        Thus an entire configuration of competencies are developing at an industry and even economic level (Raghuram Rajan, Amartya Sen, et al). As CK Prahalad points out, the trick is in melding all these competencies to create "productized systems of services..."  which has also started happening.

        A simple extrapolation of the trends even point that India has the potential to overtake China - not just in building IT systems (China leads in IT consumption, but India leads China in exports ONLY), but also in manufacturing, because of high value creation and not plain vanilla contract manufacturing.

        Further, this spells good news not just for India, but for America, and China as well, because such highly integrated "services systems" mean true Globalization at multiple levels. Though it could be more good news for India due to natural demographic shifts currently in process.

Best Regards,

-----Original Message-----
From: india-gii-bounces-exipcMZXGhH9nmKIgjYY/w@public.gmane.org
[mailto:india-gii-bounces <at> lists.cpsr.org]On Behalf Of Ravi Pratap M
Sent: Monday, December 01, 2003 11:09 AM
To: Arun Mehta
Cc: iitdelec75-hHKSG33TihhbjbujkaE4pw@public.gmane.org; India GII
Subject: Re: [india-gii] businessweek on outsourcing to india


On Sat, 2003-11-29 at 17:36, Arun Mehta wrote:
> Excellent article! Suresh, thanks for the pointer...

        Indeed. I ran (well, drove ) down to the Borders store close by and
actually read the article in print. It is unbelievable how much
attention the US media is showering on India. Fortune's latest issue
also carries a very similar article (although it isn't the cover story!)
titled 'Where Your Job is Going'


> vital to America's future... so all these attempts by the government at
> various levels, to stem the tide of outsourcing, are no more likely to work
> than Canute's fabled attempt on English shores...

        I also believe that this backlash against India (thanks to it being the
major outsourcing destination) is pretty temporary too. The bottomline
is that it can't stop.
       

> On india-gii, we have tended to look down at outsourcing. We made the point
> repeatedly, that the bulk of outsourced work was terribly low-grade. But
> this article seems to contradict this belief. A very important point being
> made is that as the level of outsourced work rises, so does the transferred
> capability.

        I don't know what was discussed earlier on india-gii but I do know for
a fact that although quite a lot of outsourcing work tends to low grade,
as you put it, that really has been changing significantly. The article
points out how research centers like GE's and Texas Instruments, Intel,
Microsoft etc are doing some quality work. of course, they do form a
small portion of the big chunk but the important thing is - it is
happening


> We have a manufacturing sector, but why does it fare so poorly in
> international competition? One important reason, imo, is our slavish

        I don't know about all sectors but an example that comes to mind is the
outsourcing of auto parts to major manufacturers from the Kirloskar
plant. What about car companies setting up India as an export hub ?
Granted not all these are Indian companies.

> an improved version? More likely, you purchase a design from overseas
> again. I may be exaggerating a bit, but if so, it is only a small bit. I'm

        I think the trend is slowly reversing. Tata Indica was one. The recent
Zen redesign was done entirely in India. Agreed R&D isn't in our culture
but it is going to start becoming more important.


> >>Quietly but with breathtaking speed, India and its millions of
> >>world-class engineering, business, and medical graduates are becoming
> >>enmeshed in America's New Economy in ways most of us barely imagine.
>
> Millions? Does anyone have reliable numbers of the the number of people
> involved in outsourcing in India?

        I recall that the total number of IT workers (quoted in the Fortune
article) in India is around ~ 0.5 million. I don't think there are
millions!



> >>As hiring explodes in India, the jobless rate among U.S. software
> >>engineers has more than doubled, to 4.6%, in three years. The rate is
> >>6.7% for electrical engineers and 7.7% for network administrators.
>
> By international standards, these aren't such terrible rates... I'm
> guessing part of the problem is that many people are unwilling to take pay
> cuts.

        That is always the problem. But a recent McKinsey report estimates that
69% of those who lose their jobs find another and 55% of these take a
pay cut. The numbers are extrapolated from what happened in
manufacturing, I believe, but they are bound to be worse for
outsourcing.


> I wonder how many of them have outdated/insufficient skills? Like us the US
> faces an educational challenge too.


        Agree totally.


> >>That growth is inspiring more of the best and brightest to stay home
> >>rather than migrate. "We work in world-class companies, we're growing,
> >>and it's exciting," says Anandraj Sengupta, 24, an IIT grad and young
> >>star at GE's Welch Centre, where he has filed for two patents. "The
> >>opportunities exist here in India."
>
> This, I find really exciting: but how widespread is this feeling?

        I know for a fact that it is certainly responsible for a *lot* of
people I have personally met to actually consider going back to India
after being in the US!


> I call IIT's 100% Export-Oriented Units, by the way, and if their graduates
> aren't going to the USA in the numbers they did, it must be because the
> visa has become harder to get, or assistantships at US universitites...

        I don't think that is totally fair. A fair number of my batchmates
chose to take up jobs while some others went to IIM. Almost 65% still
came to the US though


> Yes, but what percentage is actually exportable? Someone in Bangalore
> cannot replace the girl at the McDonalds counter!

        I think the point is that a large percentage actually is. How many
industries involve services that are over the counter ? And what
percentage does it actually contribute to their business ?


> times what we get? OK, Indian salaries will rise, but as we have an
> unlimited supply of trainees, not much. Will those in the US fall without
> voting out a succession of presidents? And if you threaten the president of


        As I said, this backlash cannot go on for over. It will pass.


        Ravi


--
Ravi Pratap M <ravi at ximian dot com>
Selective perfectionist, compulsive programmer
http://primates.ximian.com/~ravi

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