India 3.0: Shaping an Economy Immune to Future Economic Disruptions | Article

Karthik Nagendra, Manager, Wipro Council for Industry ResearchTo survive in today’s economic climate, organizations must contain costs while continuing to invest in customer-facing technologies to attract and retain customers. Many have discovered outsourcing some of their technology functions provides the requisite cost savings and efficiencies that help them remain profitable while also sustaining competitive advantage.

It’s imperative for companies to choose service providers with proven technological expertise and complementary capabilities. With service providers across the globe, where should companies send their work?

After determining what they want to outsource offshore, many U.S. organizations continue to send their IT projects to India, the offshore pioneer. Today, India is poised to move to the next level through innovative business and education models. Its new models make it ready to provide buyers outsourcing success in today’s “new normal.”

India has a growing economy

Today, India is the world’s fourth largest economy in terms of purchasing power parity (PPP), behind only the USA, China, and Japan. According to Goldman Sachs, India’s gross domestic product (GDP) per capita will quadruple by 2020 and will surpass that of the USA by 2050. The investment bank expects India to overtake Japan and become the third major economic power within the next 10 years.

India was better equipped than many other countries to cope with the recession because of several unique economic characteristics. These include:

  • India’s domestic consumption
  • A large number of public-sector jobs that are relatively more secure than the private sector
  • India’s prudent mix of monetary and fiscal policy as a response to the economic climate that better copes with the downside
  • The recent decline in commodity prices

The country was able to hold its ground throughout the volatile economic climate of the past year and stayed strong throughout the worst of the recent global financial crisis.

India is also one of the few global markets that offers high growth and earning potential in practically all areas of business. According to Moody’s Economy.com, a division of Moody’s Analytics, an independent provider of economic analysis, India has been partially responsible for the economic upswing. “The world economy is starting to recover, thanks to renewed growth in China and India,” according to a Moody’s report.

In fact, the growth in India’s real GDP stood at 6.7 percent in 2008-2009. And the World Bank has projected an impressive eight percent growth rate for India in 2010. This growth will make India the fastest-growing economy for the first time, overtaking China’s expected 7.7 percent growth rate.

Because India’s economy isn’t dependent on exports, like other emerging markets, the country hasn’t been severely affected by the global financial crisis. Long term, India is likely to maintain growth of between five and six percent, surpassing that of China and Western Europe.

India’s new business models

Today, companies must invest in developing innovative new business models for a competitive edge. IT plays a pivotal role, as does incorporating low-cost, high-tech solutions. New business models include the following:

  • Outsourcing 3.0/Location Optimized Global Services: Outsourcing 3.0 refers to the third phase of the Indian outsourcing story. An expansion of trade in goods between low-income economies and their higher income counterparts drove phase one. IT advancements expanded trade in services, creating phase two.The Location Optimized Global Services model is driving phase three. Here, a large number of employees are located in a low-cost location, while a smaller number of employees work in a higher-cost location. The Location Optimized Global Services model transforms the outsourcing model, making it to an end-to-end business model.
  • Collaboration is the key to economic growth: Companies now understand that to survive, they need to move up the value chain and innovate consistently. They have to do this by partnering. Companies that build new business models and innovative products and services will win in the reset world and be able to shape an economy that will be immune to future economic disruptions.
  • Recession-breaking business model components: Companies that wish to “evolve” business models must keep several ideas in mind. First, they must adjust to and become comfortable with constant economic chaos. Second, they need to keep up with customer values, striving to understand customer motivations and desires. Third, they have to keep in mind that people will always buy good products. Fourth, companies should take advantage of slower times to re-assess the current business model and update where necessary. And finally, organizations need to explore new markets and new opportunities.

New education models

In the new normal, it’s essential for organizations to deploy resources as early as possible on projects. India needs to focus on new educational models that will play a vital role in producing graduates who can meet these outsourcing requirements.

Some of the new education models that will impact India’s future are:

  • Education 2.0:
    The use of asynchronous technologies for education allows companies to shift from expensive “just-in-case” learning to productive “just-in-time” learning.
  • Rise of education entrepreneurs:
    Visionary thinkers are redefining the sense of what is possible in public education.

India’s innovative outsourcing solutions

Leading Indian companies like Wipro are redefining outsourcing with transformational solutions, innovative delivery models, and pay-per-use pricing models. New solutions and models allow them to take ownership of the service and business level agreements, moving toward becoming an extension of the clients’ organizations and a true partner, not merely an outside vendor.

Wipro is also deploying innovative teaching materials through the “Wipro Applying Thought in Schools” program. In this initiative, a network of organizations and India’s state governments are partnering for a diverse set of school reform projects. In addition, India’s Azim Premji Foundation, a non-profit organization that strives to significantly contribute to achieve quality universal education that facilitates a just, equitable, and humane society, worked with Wipro to create syllabus-based bi/trilingual multimedia content, which it then gave to teachers in more than 16,000 schools across 14 states in India.

Post-recession, businesses have to take a new approach to the way they do business and manage their employees. India’s focus on new business and education models will enable the country’s organizations to better support global firms, both in achieving their strategic objectives and employing quality individuals.

The companies that build new business models and innovative products and services with the help of Indian service providers will win in the reset world and be able to shape an economy that will be immune to future economic disruptions.

Lessons from the Outsourcing Journal:

  • India was able to hold its ground throughout the volatile economic climate of the past year and stayed strong throughout the worst of the recent global financial crisis. It is better equipped to cope with the ongoing recession because of several unique economic characteristics. These include:
    • India’s domestic consumption
    • A large number of public sector jobs that are relatively more secure than the private sector
    • India’s prudent mix of monetary and fiscal policy as a response to the economic climate that better copes with the downside
    • The recent decline in commodity prices
  • Leading Indian companies like Wipro are redefining outsourcing with transformational solutions, innovative delivery models, and pay-per-use pricing models. New solutions and models allow them to take ownership of the service and business level agreements, moving toward becoming an extension of the clients’ organizations. Indian service providers are becoming true partners as opposed to merely an outside vendor.

About the Wipro Council for Industry Research: The Wipro Council for Industry Research comprising of domain and technology experts from the organization aims to address the needs of customers by specifically looking at innovative strategies that will help them gain competitive advantage in the market. The Council in collaboration with leading academic institutions and industry bodies studies market trends to equip organizations with insights that facilitate their IT and business strategies. For more information please visit www.wipro.com/industryresearch.

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