India: Cheap or Chic?

It’s always good to see some detailed analysis from Horses for Sources. The blog has always been a great source of information so it’s really nice to see them as the research partner to SSON. One story really caught my eye recently -Â (Is it time for Western Indian cultures to blend?) Â , which made me think a lot about some of the issues I have observed over the past decade or so as the Indian IT outsourcing supplier community rose in prominence

And there is the problem. I referred to them as Indian suppliers. Despite the best efforts of Infosys, Wipro, HCL, TCS, and several others we all know, they have consistently failed to change the general impression of them as somehow being linked to the country of their origin.

Contrast some other IT suppliers against these names and you can see what I mean. IBM, Steria, Capgemini, Siemens Information Systems, Stefanini… I wouldn’t attach national labels such as American, French, German, or Brazilian to these companies. Well maybe I would with Stefanini as the smaller and less familiar of that group, but even they feel less defined by where their headquartersÂ are located than many of the Indian companies.

Sticking to the facts though, many of the Indian technology firms do a great job. They are professional and many are industry leaders. So where has this cultural tic developed?

Unfortunately I think it is from a sense of shame. Cast your mind back to the heady Champagne-fuelled days of the millennium and you might just recall the millennium bug. It was a problem with a delivery date that could not be changed or missed. The need to test a vast number of IT systems all over the world created an opportunity for the Indian technology firms. They seized it and many companies tried outsourcing offshore for the first time ever – because they were forced to by a shortage of resource.

The Indian technology firms became known as body shops. They offered skilled IT resource as cheap as chips – the potato kind. They also made an immense amount of money and perfected the art of remote service delivery by shaking down standards written on US college campuses and using them in the real world to prove they could offer repeatable quality from the other side of the world.

As the noughties boomed, after the minor downturn of 2001, all of these firms professionalized their marketing. They hired PR firms and employed marketing directors. They set up innovation labs and published white papers offering thought leadership.

They did everything possible to rebrand and shift emphasis away from the lower cost of the service they provide to the fact that in many cases they were now offering a global best-of-breed service. When you are the best in the world it must be painful to keep on reading journalists focusing on the Indian option as low cost, low cost, low cost.

In many ways their efforts worked. Most of the analysts and senior decision makers in the industry now have a respect for these firms and an appreciation of the quality they offer. I think it is usually business journalists who persist in calling them a cheap option – much exacerbated by the global economic slowdown when nobody wanted to talk about blue-sky thinking anymore. Cost became king once again.

But though the worst is now behind us, I guess it will take a long time for many industries to be thinking purely in terms of strategy, so that intelligent cost management emphasis is going to linger. And, so too, will the national moniker.