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Indian and European IT firms are turning globalization on its head

Indian and European IT firms are turning globalization on its head
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First Published: Wed, Mar 21 2007. 12 11 AM IST
Updated: Wed, Mar 21 2007. 12 11 AM IST
Hanover: India enjoys an unparalleled reputation as an outsourcing destination for the high-tech sector and the diaspora of home-grown computer programmers has long been transforming the global economy.
But some European entrepreneurs are turning the globalization equation on its head, recognizing India as a bold, hungry market that is likely to assert itself in new ways and eclipse much of the West in the coming years.
Employees of the German unit of outsourcing giant Hexaware now spend months at a time living in India, taking a pay cut as they draw an Indian salary and live in average Indian apartments to get a taste of real life in the country.
“Our staff has to understand the culture and system in India.You can’t do that over the phone or a brief induction training course,” said Gerrith Hermes, the CEO of Hexaware’s German unit. “You need three or four months living and working in India to begin to understand how people react there and why some approaches work better than others.”
Hexaware is an Indian company that employs some 150 people in Germany-- a reversal of the standard globalisation set-up in which Western companies cut costs by sending jobs to low-salary, low-cost markets such as India. Hermes said Hexaware’s practice of sending its German staff to India to watch and learn is less a quirk than a preview of the rapidly changing dynamics in the 21st century economy.
“I could well imagine that in the next few years, German students won’t necessarily do internships at German companies, but rather go to India,” he said. “If I’m right and India remains an unbelievably important country for the IT sector, in two or three years we are going to be desperately seeking IT specialists with experience in India or with Indian companies.
“The ones who are successful will say, ‘I know how to work with an Indian firm, I understand the problems that surface, I can understand the language barrier, I know, culturally, why some things work better than others,” he added.
The Indian government aims to achieve a “sustainable growth trajectory” of around 10% (in gross domestic production) annually by 2012 while its 1.1 billion population is one of the largest potential consumer markets in the world.
Hermes said Germany in particular had been slow to realise that it is no longer at the heart of the global economy and risks slipping much further behind in the coming years unless it adapts.
“The fact is that the vast majority of Germans or central Europeans have not completely walked away from colonialist-type thinking,” he said. “We’ve never learned to do that. When (Indian steel magnate) Lakshmi Mittal buys the most expensive house in London, it is in fact just one symbol among many.”
Frank Woitag said he too had recently developed a new appreciation for the importance of India. Woitag is the founder and managing director of Stratos, a firm specialising in travel-planning software that is based in Germany’s economically depressed former communist east.
The mid-sized company was having financing problems until 2004 when it sought a technology partner in Extentia Information Technology, a software developer and consulting company based in Pune, Maharashtra. “There was a steep learning curve for all of us, but in the end the best partner for us was 5,000 or 6,000km away,” he said.
“We really had to adapt. None of us wanted to switch our working language to English—there was a lot of resistance and mistrust in the beginning because it was such a colossal difference. But now we are working with an Indian partner on an additional project,” Woitag added.
Anand Rahul, the head of the European business unit at Extentia, said he believed his colleagues in Germany had also learned the limits of what a foreign partner can offer.
“In Germany, they think they can outsource a problem. But that does not work. This idea that they could send a defective programme to us and we would fix it—it was destined to fail. Everyone had to do their homework,” Rahul said in flawless German. “We sent a software architect to Germany and worked together to develop a solution.” Woitag said that his company had long turned away business because it did not have enough qualified personnel.
“We in Germany have made serious mistakes in the last 20 years of education policy,” he said, recalling the IT and telecommunications lobby reports that Germany lacks 20,000 high-tech specialists. “In India we found the qualified staff we needed,” Woitag added.
Hermes said that Germany had been remarkably naive in 2000 when it offered 20,000 “green cards” or work visas to Indian computer engineers and expected them to beat down the door.
“It was obvious the Green Card programme would be a flop. Top people go to the United States, Australia—the language is English, there are other Indians, the taxes are lower,” he said.
“Or you could go to Germany, where people barely speak any English, you earn €65,000, pay 40-45% taxes and have to count your blessings if you wear a turban or have dark skin and don’t get beaten up. Which country would you choose?
“That meant that the ones who came here were the ones who didn’t get jobs elsewhere,” Hermes added.
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First Published: Wed, Mar 21 2007. 12 11 AM IST
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