Tuesday, April 04, 2006

The Great Leveling

The rise of India and China and demise of America is well- trodden literary territory. But the focus of Thomas Friedman’s “The world is flat” is along different lines…This book is not about what “will happen” but its about “what is happening”. He wants to tell you how exciting this new world is, but he also wants you to know you're going to be trampled if you don't keep up with it. This is “THE” book, if you’re a Bangalorian (and for that matter an Indian) and are looking for some ego boostJ.
He talks about everything that has made globalization possible, from the fall of the Berlin Wall to the explosion of the internet to the dot com bubble and bust and outsourcing of jobs to India and China, globalization has evened the playing field for many emerging economies.

He talks about 10 different events / factors that has made the world flat and its well researched. It will give a very good understanding on how we have benefited from all of them. It gives an insight on how we have been able to generate a lot of jobs right from research (high end) to call centre jobs (low end)…But this article is not about this book but my thoughts on the subject…

These are a few questions we should be asking ourselves…

Is this what we want?
Is the society improving as a whole?
And does it really help in the long run? If not how do we adapt?

There is no answer to the first question but I feel we have got more than what we have lost!! Here are some pointers…
Isn’t it better to have a job even before we graduate?
Isn’t it better to be well paid for the work that we do instead of being hardly paid for the same amount of work?
Doesn’t it feel good to spend and save simultaneously at such an early age?
Isn’t it better to try some of the opportunities available, learn from it and decide the course of your future rather than spend the prime time of your career in searching and then stabilizing in a job?
But India's Y2K windfall could be read just as easily as a sign of dependence, of reliance on tasks that American workers no longer want. Friedman rightly notes that "low-wage, low-prestige jobs in America . . . become high-wage, high-prestige jobs" when outsourced to India. But in an era where, both pride and humiliation get served up to you via fiber-optic cable, it's not at all clear we'll like the long-term geopolitical consequences of having emerging powers reliant on scraps from the American economic table.
But the whole point is that we are better paid and are well off for the work that we are doing…
As far as health and other personnel factors are concerned we cant have the best of both the worlds so the onus is upon us to develop a strategy to balance out both the worlds (work & personnel). This is anyway easier said then done… But I think we will eventually get there…

Don’t u think the society as a whole has improved?.
Just imagine what the current youth (35% of Indian population) would have done if the Indian economy hadn’t opened during the nineties…. We might have become another Pakistan for all u knowJ In spite of these new opportunities we see that the unemployment rate is still high, so we can as well imagine how it would have been without the outsourced jobs…
The overall economy is booming, the GDP has improved and the spending capabilities have definitely increased. All these factors have made us one of the most preferred destinations.

Is the honeymoon going to last?
The term “honeymoon” itself, indicates that it’s not something that might lastJJ
The advantages that we currently have are
1.Low wages
2.Low cost centre
3.Talent and HR.

Except for the third one the first two are temporary…our wages are approximately one fourth of US wages. But during every appraisal we are nearing their wages. Its been forecasted that in another 7 years time we will be almost half their wages and in 13 years time there will no such advantages.

We are already losing out on the low cost advantage. A sq foot of office space in Bangalore currently costs $20 but in Massachusetts (supposed to be one of the prime hubs) its about $16. So as soon as we catch up on their salaries we will loose the first two advantages to other low cost centers like China, Vietnam, Brazil and even Russia.

End of honeymoon doesn’t mean the end of Marriage…Now comes the time of consolidationJ
We still have the third advantage and that’s our “talent”
We can’t prevent companies from shifting to other low cost centers, which will eventually happen in another decade. But the advantage we have is we still have time on our hands…we have to improve on our knowledge base. As Indians we are born with the talent of multitasking and survival is in our blood. The Indians in US have always survived the Layoffs and that should inspire us.
The major threat will be for the low-end jobs. Most of our youth join the call centers as a stopgap solution until they decide what to do with their lives, but with the easy money flowing in and laziness creeping in it eventually becomes permanent. The problem is in due course there will always be resources in other countries who will be ready to work at lower costs. But if we don’t have the desired skills to survive, then by the time the realization starts to sink in it will be too late.
We have to work hard and diversify so that our children are not in the same state as the Americans are currently in. Having said this it doesn’t mean America is loosing out, the American economy is highly benefited from the entire process and if their economy doesn’t do well then the entire world market will be affected. But their problem is that they are loosing out on all the jobs that can be outsourced which eventually will happen to India too.

Thus we must start building expertise in areas, which cannot be that easily outsourced. We must become an economy that the world cannot neglect and we must start tapping our own consumer base. The Indian population (and the percentage of youth) is only going to increase and so will their spending capabilities and hence the market will only improve. But it’s upon us to constantly improve our skills and broaden our horizon.
We are seeing a kind of growth that we didn’t even dream off a few years back. Now it’s our responsibility to at least sustain this growth by constantly innovating.