Yesterday we had our Senge meeting. I thought I would try and capture some of the thoughts that came from the meeting. Sadly, we were missing a few folks, but we still had a lively conversation.
Topic: The Power of Productivity, Chapter 8: India – by William Lewis
The chapter itself has been covered by many other blogs and discussion groups. Here is what we ended up talking about.
As I lead the meeting, here were a couple of key notes from the chapter along with some embeleshiments from my experiences working in IT with India:
- 60% is Farming of the rest 40% of that is gov’t run/owned.
- Not an open competitive market (see gov’t below)
- Promote small business not big – lose economies of scale and productivity
- Not open markets
- Tight restrictions on new entrants
- public vs private sector in modern business sector (steel mills, commercial banks)
- Barriers and Benefits from subsidies and tax breaks
- ie. In areas no taxes on revenue from new building for 10 years
- Conformance to tax rules (evasion and layers)
- Levels of tax for same sector (retailers)
- Big business pays dispraportinate portion like Brazil
- Labour laws – need government approval for layoffs
- Local Governments bankrupt
- no investment in infrastructure
- Real Estate ownership and title a serious issue
- Utility System issues
- Caste System
- Wheelbarrow example (which I saw in real life discussion with a property manager)
- Role of software industry (50% productivity vs US)
The above items were my notes from reading the chapter and used to start areas of conversation if needed.
We spent a fair amount of time discussing the impact of the offshore IT market and how some of the above items may effect things. The general discussion talked about how it has and has not worked in cases that we have worked on and how maybe some of the insights gained in the book may help.
- One interesting observation I had was that at an offshore facility there are items such as transportation and utilities that most N.Amer. organizations take for granted that these organizations need to provide.
- Another is that Tier 1 offshore providers will hire a complete graduating class without interviews and then take them through an indoctrination process to end up with their fresh recruits (without ever meeting, screening candidates).
- The N.Amer. companies are taking a different tact which sometimes includes interviewing the families of the candidate.
- There were many anecdotal discussions as well.
We also discussed Cultural Impacts of the country and it’s neighbours. As an offshoot of this someone asked the question of comparison to China vs India in the Chinese 1 child per family policy to control population growth. None of us had any idea on this, but out of that we had a good discussion on the difference between China and India in their progress at a macro level in context of the chapter.
The nuances of the different culture, history and direction lead us to a question that I thought had the best discussion: Should we Fear India
- In 10 years India / China will replace America as the lead superpower from and economic point of view (military was not part of the conversation). How will America react to this development? Many different opinions on this. None of us are experts on Foreign policy.
- Nothing to fear as they are 40 years behind the rest of the world on development and the chapter does a good job to support this except in IT who are doing well, but still 50% productivity means that for the same output ($19-22 US has now become $38 to 44US).
- Use it as a motivating factor, in Canada and the US we often focus on productivity and as previous chapters show we are not that great in many areas compared to different geographies. But if we take Lewis’ premise of emrbacing competition to leverage it to improve productivity, then let’s do that and look at ways that we can do things differently that offset cheap labour.
- Re-invention and a relience on cheap labour will always ingrain a philosophy of approach to problems. This is a sweaping macro level example, but the wheelbarrow example from the book is also how some India based organizations approach IT and Business Process Outsourcing. So until they change that we have some time to stay ahead and learn and most likely engage together.
This was longer than I expected so I hope it is not too fragmented, and please feel free to comment.
Here is a good link from a blog I read while preparing for the chapter:
The power of productivity – Tim Harford