India’s economic boom is lopsided

June 26, 2009

It is fashionable among India’s new business elites to talk about the boom in the economy, but a lot of it has been awfully lopsided.

About 600 million people, or 60 percent of India’s population, live off the land, according to CNN. Majority of farmers depend on rainwater for crops — irrigation, electricity are a luxury.

Yet presumably in a bid to attract investors, Indian business and investment analysts have trumpeted India’s economic boom. Their comments often reflect a divide in urban/rural perceptions, a lack of knowledge about what goes on outside the cities.

Rather than provide a counter-balance to such skewed perceptions, the Indian media has by-and-large gone along with the urban point of view.

The same business classes are also planning to get the private sector into education, healthcare, and insurance, little realizing that private services are not a substitute for government. If government services are bad, fix it…….let’s not talk about privatization as a panacea.

The few instances of privatization in these sectors in India have shown that the costs of the new privatized services are way beyond India’s poor who are not only in its villages but also in towns.

The boom in India, which has been largely confined to its cities, and particularly in its outsourcing, retail, and telecom industries has created a new class that demands the best in schooling for its kids, the best in food, the best in healthcare, quite regardless of the price.

But these schools, hospitals, and other services are beyond the reach of the poor both in the cities and the towns, further accentuating the huge economic divide in the cities. School fees in some of the better private schools would add up to over US$3000 a year. That is a cost that is way beyond a woman working as a maid in the city who would earn less than US$500 a year, at the peak of her career.

The moves to have private services in education and healthcare and other areas are therefore designed to serve the new elites, and cannot compensate for government action.

While there is no objection to the elites pampering themselves like their counterparts in the U.S., there is a case for the government to set up more of its services. In these sectors there is case for more government.

The poor also have their aspirations for a better quality of life, and if that is not satisfied by government, it will find other avenues, in some cases in increased loss of faith in the system and criminality.

If the political class, corrupt and suspect, have already contributed to an erosion of faith in the system, self-serving prescriptions from parvenu Indian elites can only increase the alienation.


Indian outsourcers have to head home

October 24, 2007

Indian outsourcing companies are facing shortages of good quality staff, particularly in the call centers and business process outsourcing businesses. The attrition rate in these two businesses can be as high as 50 percent, according to some reports.

Most staff are leaving to join other companies for better terms. But some staff are leaving because of burn-out, including the long commute time to and from work. Some others are women who leave their jobs to start a family. India’s traditional joint families, in which entire generations lived in one household, are falling apart in the cities, reducing the traditional support systems offered to new mothers.

Indian outsourcers could have access to more workers if they would allow more staff to work from home. Apart from young mothers, a lot of other categories of people, including freelancers and pensioners may be willing to join the workforce, if given the option to work from home.

In this way, the outsourcers would go a long way towards empowering a whole section of Indian society. They would also save on transporting staff to and from work, providing them meals in the campus cafeteria, and other perks employees have come to expect.

To be sure, customers will not take kindly to calls being taken from homes with the dog barking, the door bell ringing, or a child crying in the background. But once home workers see the opportunity they will make the adjustments necessary to ensure that the customer gets top quality service, undisturbed by any extraneous noises.

None of the suggestions outlined here are startlingly new. They have been tried extensively in the US and the UK. They are new in the Indian context, where surprisingly Indian and multinational services companies have been hesitant to move away from proven techniques and processes to exploring new sources of staff.

But there are still a lot of challenges going forward. Mothers and pensioners in India are less likely to own personal computers. Outsourcing companies use their computers over three staff shifts. Giving a computer to a single home worker would therefore lead to an underutilized asset. Probably companies can enter into an agreement with home workers whereby they take a computer on a bank loan, on assurance of business from the outsourcer. High quality telephone and VOIP (voice-over-Internet-protocol) links are available, and outsourcers can probably buy the capacity in bulk and distribute that out to the home workers.

The biggest sticking point is however likely to be data security, the fear that outside company monitored facilities, home workers could misuse confidential information such as credit card and social security numbers.

Companies are already masking at their facilities the data that could be used to compromise the customer. In many cases because of data security laws in their home countries, customers themselves are already filtering what information is available to a call center agent.

So outsourcing companies will probably have to rely less on physical monitoring using closed circuit TVs (CCTVs) and other technologies, and focus more on masking the data that is accessible to the home worker. There are also a lot of processes in business process outsourcing that do not require handling information that is confidential and liable to misuse.