Wednesday, 27 May 2009

China's Strategy for Attacking the Outsourcing Market

I see that a new KPMG study has been released on this subject.

Titled, A New Dawn: China's Emerging Role in Global Outsourcing, the report examines the current state and future prospects for China's increasing involvement in global outsourcing.

"China's central and local authorities have shown great determination to promote IT and other business services industries," says Ning Wright, Partner in charge of Sourcing Advisory, KPMG China. "We have seen the Chinese government's eleventh five-year plan (2006-2010) shifting more focus towards IT services. The broader strategy from now until 2020 calls for the development of an IT economy, driven by science and home-grown innovation. The long term development of a robust domestic outsourcing business is a major goal."

It you get the impression that the Chinese are intending to develop primarily DOMESTIC outsourcing, that is only half the truth.

"We have found that many companies globally and in Asia are increasingly turning to China for their outsourcing needs," says Egidio Zarrella, Global Partner in charge of IT Advisory, KPMG China. "This, combined with the untapped potential of China's large domestic market, means that China's outsourcing companies are well-placed to weather the current economic turmoil. Many global outsourcing companies are now setting up operations in China to target regional markets, including Japan".

Though the share of IT and IT-based services in China's export revenues is only 3% at present (compared to 26% in India), China's outsourcing market is developing quickly.

The Ministry of Commerce has crafted a number of initiatives for developing the sector. One of these, dubbed the "1000-100-10 project", aims to DOUBLE China's service exports by establishing 10 Chinese cities as outsourcing bases, attracting 100 international companies to offshore in these cities, and assisting in developing 1,000 outsourcing vendors that can meet the demands of multinational customers. Since these details were announced, the government has actually identified 20 cities as service outsourcing hubs. In addition, a number of other cities already have strong outsourcing capabilities.

Despite the perception in many overseas markets that China remains a risky place to do business, with IPR the key issue, there is no doubt that India needs to wake up if it wants to keep its lead.

For all practical purposes, India has only two major IT cities (Bangalore and Hyderabad). Though other cities are not negligible, the infrastructure even in Bangalore badly needs to be thoroughly upgraded, and Hyderabad too needs to consider several things it needs to do if it wants to remain competitive - let alone improve its competitiveness.

All the other Indian cities need a major shot in the arm in order to make them globally IT competitive.

The new Indian government needs to turn its mind to this key issue.

When China attacks a sector it does so with military thoroughness - not surprising, given its political structure.

KPMG report is at:

Tuesday, 26 May 2009

The CRT's Social Capital Index: India's score improves, China declines

The Caux Round Table published its last Social Capital Index in 2005, where India came 78th out of some 190 nations. China stood 84th.

The CRT's latest Social Capital Index, just published, puts India at number 76 out of 199 countries. So India has improved two places.

By contrast, in the latest Social Capital Index, China is now 94th. That is a decline of 10 places.

The reasons for these changes cannot be definitively reduced to any identifiable factors from the Index itself, at least so far as I can work out.

Nevertheless, interesting.

Wednesday, 20 May 2009

Memo to Prime Minister Manmohan Singh: A giant step to solving India's educational challenge

Dear Prime Minister

Shanti Bhavan is an Indian school which has just seen its entire 10th class achieve First Division in the ICSE exam results just released.

ALL the students in the school are Dalits!

Are this year's results a fluke?


But that is less than likely, given that this is the second year in a row that the school has achieved this astonishing success.

In India's entire academic history, Shanti Bhavan is the first school for Dalits to achieve First Division in the ICSE exams for 2 years in a row. Over 1,500 schools in India and abroad take the ICSE annually.

You may wonder whether these students are, perhaps, from exceptionally RICH Dalit homes.

Actually, all are apparently from families facing extreme poverty - the parents are employed as sewer cleaners, quarry laborers, and so on. Many are, or have been bonded-laborers, trapped in debt to landowners and money-lenders.

Apparently, even though something like 25% of our population is Dalit, less than 5% of those who take the ICSE are from the "lowest castes." Graduating from high school has been difficult for Dalit children because of poverty, but an even more important factor is the social injustice that is rooted in our languages, scriptures and culture.

The Founder of the school, Shanti Bhavan, is Mr Abraham George whose family originally hails from Kerala even though he has created the school in Tamil Nadu.

"With this success", he writes in the Press Release announcing the results, "the door is wide open to our children, and they now have limitless opportunities to pursue higher education at top universities".

Well, that might be a bit of hyperbole, since it is not entirely impossible for a school to be available near a Dalit area, but a "top university" is far less likely to be available locally - so travel, accommodation, fees and the rest will have to be found if any of these Dalit children is to actually make it as a student into such a university.

However, Mr. George is right in indicating that, in principle, it is now possible for these children to find open doors at the top Indian or even foreign universities.

Dr. Dagmar Etkin, a former Harvard instructor and an environmental scientist, taught Chemistry and Environmental Studies to the 10th grade students at Shanti Bhavan. "The children of Shanti Bhavan are as intelligent and (now as) educated as any of their peers. They would fit in perfectly in a class of freshmen at Harvard" (brackets mine).

She added, "I cried when I saw their huts and the overwhelming poverty. It was difficult to believe this is where my students had come from. The ICSE results prove that Shanti Bhavan's model is working."

The Press Release closes with an appeal to individuals to donate money so that the good work of this school can continue and be extended.

Naturally, I support such an appeal for such a school - and I hope that you, Sir, can do so as well.

However, I wonder if the following might not be a better idea.

On the basis of value-for-money, should not the Government of Tamil Nadu hand over all poorly-performing government schools, one by one, to Dr George? If and when he has made an equally outstanding success of these schools, perhaps the Government of his State of origin, Kerala, might be willing to do the same? And what about the rest of the States in the country?

Alternatively, perhaps all Central Governemnt money which goes as subsidy to schools that are not performing well in ANY part of the country should, step by step, be handed over to Dr George?

The man and his team must be doing something right! Why not give him the resources to replicate that success right across our nation?

Naturally, as I believe in the merits of competition, I am not suggesting that all other schools should be shut down (government or private).

I suggest merely that all schools receiving government subsidy but not performing as outstandingly well as Shanti Bhavan should, gradually (with the respective government subsidy) be handed over to Dr. George.

At the very least, Dr. George's contribution should be recognized by the award of a Prize for National Integration, as he is a Keralite but has created the school in another State.

For your interest, the school's website is:

Yours sincerely

Prabhu Guptara

Saturday, 16 May 2009

How India discourages NRIs from returning

I have read various articles and interviews on this subject, and all of them focus on the "culture shock" of returning - the inefficiencies and convoluted ways are apparently the main discouragement.

However, I have never seen anything in print on the following issue:

Someone I know, let us call her Shanti, who has been to India regularly and therefore does not face that problem, was in discussions regarding a job offer in India which he was considering very seriously.

Everything else seemed to be more or less settled, when she discovered that, if she stays in the country for 182 days or more, she becomes liable to tax in India for all her income worldwide!

As she has a pension from her employment abroad (on which she pays tax in that country), she did not want to pay tax twice over! She could not get any clear answer regarding whether that would or would not be covered by any Double Taxation Treaty.

She wanted to return to India to contribute to the development of the motherland, not to wrestle with tax officials interested in hassling her for a bribe.

The company which was discussing the job offer with her had, on the basis that she was an NRI, agreed to pay all tax due on income arising from employment with them.

So she offered to the company to disclose her pension income and to take the job on condition that the company dealt with the Tax Office on her behalf, while she indemnified the company against any tax liabilities in India or abroad.

Interestingly, the company declined to do this. Preeti decided that if even an Indian company was unwilling to tangle with the tax inspectors on her behalf, she had better not go.

It is right and proper for the Indian government to want taxes to be paid by NRIs as from "normal" Indians on all income derived from activity in India.

But why exactly does the Indian governemnt want to tax income arising abroad from activities or investments done prior to an NRIs return to India?

Anyone know?

Monday, 11 May 2009

India No Bribery Coalition

What a wonderful initiative!

If you want to help the country progress, then get your company or organisation to sign up!

The website is:

It says all that they have thought of saying, but they tell me they would welcome any suggestions.

Saturday, 9 May 2009

Sex and Indian youth

A newspaper report of a study titled "Youth in India - Situation and Needs" has been sent to me by a friend. The study indicates that rural Indian youth indulge in pre-marital sex far more than urban youth: one in five young men in rural areas as compared to one in nine in urban areas had indulged. For women, 4% in rural areas had sex before marriage as compared to 2% in urban areas. Cutting across the urban-rural divide, the study found that 16% of young men and 3% of young women reported being physically intimate with their partners. Apparently, the authors of the study were surprised by the result, opining that "It can safely be concluded that pre-marital sex is not an elite phenomenon any more".

The reaction of the report's authors shows that they know very little of Indian history or culture. Multiple husbands/ wives was common in India throughout our history till the influence of the Gospel of Christ brought in the idea of one man/one wife. As that influence was more in the cities and among educated people, that is where the idea of one-man/one-wife was most prevalent till Independence. After Independence, the idea of one-man/one-wife was popularised by what we now call Bollywood, which took up the idea along with the notion of romantic love (much more entertainment potential than arranged marriage, for example). However, as the influence of Christ's Gospel has waned in India in the last twenty years or so, the idea of multiple-husbands/ wives (or at least of mistresses and lovers) has begun to make a comeback all over the country, even among educated Indians in the cities.

For the original report, by Sumitra Deb Roy, see:

Tuesday, 5 May 2009

Royal Gourmet Tour of India for German-speakers

On the basis of his many years of experience btween India and Switzerland, my friend, Mr. Ramraj Bhalla, has decided to bring it all together in a new Royal Gourmet Tour of India, which I warmly recommend (beware: I am a shareholder in the company jointly-sponsoring this - i.e. King's Kurry - and I might even join in!)

India's first fully bi-lingual Hindi-English magazine

I welcome the announcement that FORWARD, India's first magazine to have its full text in Hindi as well as in English, is ready for launch.

The idea of the magazine is to help Hindi-speakers have the English version of exactly the same material in order to improve their English, while also enabling them to keep up with current affairs.

Ditto for English-speakers who have some Hindi and want to improve their grasp of the language.

The magazine will appear monthly, and its first print run is 100,000 copies.

Congratulations to the Delhi-based team for struggling past all the hurdles that Indian bureaucracy can set up: the team started working on the magazine in January 2007!

It isn't easy to acquire property and to get hold of all the various permissions without giving a bribe, but they have done it!

Well done! And all best wishes!

Now they "only" have to make a success of it through distribution, ads and marketing!

(I should say that I am involved with the magazine, chiefly as cheer-leader!)