An Outsourcing Paradox

I was reading "The World is Flat" last week and this blog is inspired from a beautiful paradox that Thomas Friedman puts across in the section "India Vs. Indiana".

... In 2003, the state of Indiana put out to bid a contract to upgrade the state's computer systems that process unemployment claims. Guess who won? Tata America International, which is the US-based subsidiary of our India's Tata Consultancy Services Ltd. Tata's bid of $15.2 million came in $8.1 million lower than that of its closest rivals, the New York-based companies Deloitte Consulting and Accenture Ltd. No Indiana firms bid for the contract, because it was too big for them to handle.

In other words, an Indian consulting firm won the contract to upgrade the unemployment department of the state of Indiana! You couldn't make this up. Indiana was outsourcing the very department that would cushion the people of Indiana from the effects of outsourcing. Tata was planning to send 65 contract employees to work in the Indiana Government Center, alongside eighteen state workers. Tata also said it would hire local subcontractors and do some local recruiting, but most workers would come from India to do the computer overhauls, which, once completed, were "supposed to speed the processing of unemployment claims, as well as save postage and reduce hassles for business that pay unemployment taxes", the Indianapolis Star reported...

The contract became a political hot potato and was eventually cancelled. The people of the state of Indiana considered this as one of the biggest local employment insecurities posed by the outsourcing phenomenon in the US. The then Governer Joe Kernan, ordered the state agency, which helps out-of-the-work Indiana residents, to cancel the contract and also put some legal barriers and friction to prevent such a thing from happening again. He also ordered that the contract be broken up into smaller bites that Indiana firms could bid for - good for Indiana firms but very costly and inefficient for the state. A check for $993,587 was sent to pay off Tata for 8 weeks of work.

Friedman argues in terms of the intricate sorting out process that needs to be done during globalization and raises a critical question, "Who is the exploiter and who is the exploited in the India-Indiana story?"

A similar article on another IT outsourcing contract caught my eye recently. The Business Standard article titled "IBM wins Amul's 10 year outsourcing contract" sums up like this:

IBM will provide information technology services to Amul, the Gujarat Cooperative Milk Marketing Federation (GCMMF), and its milk unions to support their growth plans. The 10-year outsourcing deal is worth over Rs 80 crore and under the terms, IBM will manage and operate the IT environment of GCMMF for the next 10 years, primarily by setting up a technology platform based on ERP systems and a datacentre backed by a Disaster Recovery Centre. As a result, the cooperative will be able to improve its supply chain, strengthen customer focus and achieve stronger growth. Amul has deployed information technology from the grassroot level of Village Dairy Cooperative Societies and the new deal will affect the lives of millions of farmers.

There were several Indian bidders in this outsourcing contract and apparently, none could win. Surprising, isn't it?

And I end this blog right here with the two questions that confronted me:
- An Indian Software Firm bag which won a similar sized contract ($ 15 million) in the United States (mainly because of the cost efficiency element) lost out to an American firm in its home country??
- Is this an effect of true globalization or our own desi IT firms are busy getting pampered by American outsourcing jobs?

The recession has certainly reduced this American dependence and all the firms have now been forced to look at the Indian subcontinent for business. While this is definitely healthy to bootstrap our economy, the Amul contract only seems to suggest that the Americans, armed with their low cost workshops in our country have woken up now.

The 5% (Extra) Engineering: Winning the GE Edison Challenge

I published the following article on WhyNewton recently. Many thanks to Neha Arha for helping me out with the compilation.


TECHNOLOGY WITH A TINGE OF SOCIAL ENGINEERING IS WHAT brought us to win the second edition of General Electric’s “Edison Challenge”, a competition pitting science students from across the country against each other to find the best technological innovations to provide electricity in rural India.

While in my freshmen year, I heard about IViL and its objective, i.e., rural development, something that closely intersected with my area of passion. It was love at first sight and I immediately joined as a volunteer.

At IViL, we were a bunch of diverse engineers from a variety of streams and specializations. The club initially was quite different in comparison to what it is today. There were four major teams: AIPA (Alternative Industries Promotion Activities), SPA (Science Promotion Activities) and two other groups. Despite a number of meetings and discussions less than 1% of the talks converged into action.

This pained us and I, along with a few others, helped change the face of the organization. We restructured it and formulated 10 teams which dedicatedly worked on one big project - Opening an "Integrated Knowledge Centre" at a village called Natham, 50 kms from Chennai.

I, assisted by IViL team, conducted a one day capacity building workshop for all the ten different work groups and they were mentored by experienced professionals from the developmental sector. Luckily, collaborations followed. With a few non-profits and institutions, we floated an organization called "Indian Rural Development Initiative" (IRDI) and conducted a 2 day awareness camp in the village. The workshop greatly motivated the work groups and after around 6 months of focused action, we were able to inaugurate the centre on January 26th, 2009.

GE EDISON Challenge…
The problem statement, as stated in the beginning of my story, greatly excited me and I formed a team of 5- Kaushik Anand K., Midhun Salim, Ashwin Ramesh, Aditya Harit and Srinath Ramakkrushnan- myself.
We started working this summer and took up Natham as our model village and we concentrated on solving 3 major problems there:
- Sanitation (228 out of 350 households in the village had no access to toilets)
- Electricity deficit (4-6 hours of power shedding everyday, 365 days a year)
- Value-chain Upliftment (Paddy farmers in Natham paid 750-850 bucks to the local traders, whereas the market price of rice 15 kms from the village was somewhere between 1400 and 1600).

Our major emphasis was on practicality and implementation of the solution. We did not want to goof up a pseudo solution and tout it as life-changing. We realized that 95% of the technology is already made for rural India but they are all sleeping because they lacked the extra 5% engineering. We call this as "social engineering". We picked up proven technologies from different realms and socially engineered it. We used ITC's eChoupal model for enhancing farmers' value chain, a community toilet integrated with a plug flow bio gas digester for solving the sanitation problem and a gasifier for electricity generation coupled with AC coupled microgrids. The concept was greatly appreciated by the judges in the panel and hence we walked away with the top prize of Rs. 5 lakh- hefty enough to add fuel to our initiative.

Reminiscing,
At one point of time, we felt like giving up because we were all over-burdened with work. All my team members were in their final year of study and had critical things waiting for us: GRE, CAT, Placements, BTech project, coursework, etc. We had to do a lot of surveys to validate our hypothesis and that demanded a lot of visits to the village. Different people took leadership and responsibility at different stages of the project and it just kept going on.

Critical learning,
We feel that people at the bottom of the pyramid in rural India have the willingness to pay for good technology that impact their lives. We have to look at them as consumers and not as charity beneficiaries. And technologies need to be pitched appropriately. We observed that in a village where there is no facility for sanitation, there was a strong practice of vermicomposting. This surprised us and when we closely looked at the situation, we learnt that there was this guy who collects manure at 500 bucks every month. Rural Economics is complicated! We pitched to the community that biogas from animal dung and human excreta can result in a savings of Rs. 300- 400 every month. Though there was hesitation to use biogas initially, there was a drastic increase in acceptability after the new pitch.

And Now,
The very fact that IIT Madras has allowed us a space in its upcoming Research Park proves our mettle. TePP (Techno Entrepreneurship Promotion Programme), Department of Science and Technology, Government of India is also willingly extending support to our initiatives.

A start it is, But a long way to tread…


Do not go where the path may lead, Go instead where there is no path and leave a trail… - IViL