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China Outsourcing Magazine Interview Outline for Mr.


1. For a long time, India has been Chinese service outsourcing service outsourcing enterprises
to learn from. Ten years ago, China government has established the development of service
outsourcing industry national plan, trying to go beyond India, but from a practical point of
view, the gap between Chinese and India more and more. Why does this happen? What are
the key factors for the success of India's service outsourcing industry? (800-100 words)

I structure my responses under 4 tiers as below.


Let me try explain the inherited difference between India and Chinese economy.

China India
Economy size $11.8 Trillion $2.45 Trillion
IT Services industry size $50bn $155bn
Domestic IT services market $40bn $38bn
No. of IT services companies More than 60,000 More than 16,000
Source: Wiki, CSIA & NASSCOM Annual report

These above numbers tell a story in themselves which is not difficult to decipher. In essence, the
economy with size of almost $12Tr only spends about $40bn on IT whereas Indian economy
which is 1/5th the size of Chinese economy boosts IT market of about the same size. Indian
economy has had very high level of IT adoption rate which depicts services culture mindshare.

China after having performed one of the biggest economic miracle of the century by pulling off
millions from agriculture to more paying manufacturing jobs - intended to replicate the same in
its move to graduate towards services setup. And in doing so treated and is also currently
treating IT with a manufacturing mindset.

There is always a product or tangible goods in the centre of any business discussion related with
IT in China. The simple point(s) being 1) China treats IT also as manufacturing 2) China does not
buys services but only products.

This lack of services culture in China impedes the growth of the IT services sectors and I would
tend to believe would be doing so in other services sector also. IT does not needs - flashy
business parks or wonderful incentives or best in class incubators filled with expensive
equipments - to produce billion dollar companies. Some of the very big revolutionary business
ideas that changed the face of IT across the world started in a car garage. The new startup culture
is producing 70% of the worlds new age billionaires and not families that own diamond or coal
Society level

Services culture is very different from product mindset e.g. Doctor providing services after
learning what is the root cause of the problem of the patient. Versus a company manufacturing
medicine for an ailment. Whenever we talk to CTO of Chinese corporation about services
invariably the conversation drags to how much Java resource is paid by Indian companies, which
in my opinion is very myopic view. Services culture does not translates into buying and selling
human bodies.

Services culture needs to translate into way of life in China where services are bought and sold
across sectors and experiences created. Customer needs to know what they need and seller
needs to create that experience

Company level

Most of the big companies have in their core strategy revolving around products e.g. Huawei, ZTE,
Alibaba, Tencent, etc. And most of these companies have their services arm as well. But there
arent any great pure play services providers. The current crop of IT services companies have a
maximum headcount of 35K or 40K whereas their global peers are in excess of 100K, 200K or

Individual level

At the end of the day its the human assets that make great services companies and thats where
lies huge difference in India and China. Its like clash of Hunger, will and determination to
succeed for survival Vs Need a job to support a lavish lifestyle that is the underlying difference.
The former are likely to apply their mind to think out of the box for innovative solutions on behalf
of their customers keeping costs in check because their lives depend on it and would never
undermine their customer. In simple words, its the difference between customer delight Vs
customer satisfaction.

2. How do you evaluate China's service outsourcing industry? (600-800 words)

China outsourcing industry is quite distributed with over 60K players where large players are not
more than 40K employees in size. So most of the companies dont enjoy economies of scale and
depth and breadth of the talent on the skills index. Many of the companies are happy serving
their contacts in large SOEs that kills innovation, creativity and competitiveness of their
customers. When many companies win contracts based on their contacts rather than merit then
it becomes a vicious circle to break.

And due to size or the lack of economies of scale does not allows investments into process
servicing methodologies and quality assurance

3. In April of this year, the U.S. government is taking a number of measures to strengthen the
management of the H-1B visa, the media evaluation, which will bring great loss to India's
outsourcing enterprises, because the data show that 50% of the H-1B visa obtained by
personnel of foreign workers in India. Judging from the current situation, does this affect the
outsourcing enterprises in India? And are they doing something about it? (600-800 words)

This issue pertaining to mobility of skilled workers has been a bone of contention for past many
years within Trade in Services with the US. The issue has always been there but hit high intensity
soon after financial meltdown period in 2008 onwards. Since then Indian tech workers in general
and Indian tech companies in particular have been at the receiving end of the slew of the
legislative measures and administrative measures targeted at curbing movement of these
workers in to these geographies. President Trump election rhetoric on jobs and tirade against
India and China generally didnt help our cause. But if we look at the current situation there is
nothing changed since President Trump taken over. The visas continued to be issued and Indian
tech workers continue to receive large number of visas because there are inherent skills
shortages in the American economy and that is the reason American companies continue to rely
on importing talent from countries such as India .

A study to this effect underlines the contribution of the foreign born workers in the USA. It
concludes that more than 50% of the companies that have become billion dollar enterprises were
started by immigrants who came into America.

As per the report done by NASSCOM, Indian tech industry:

- Supports almost half a million jobs in the US

- Has contributed in excess of $20bn in taxes to the US between FY 2011-15
- Made investments of over $2bn in between FY 2011-13
- And touched 120K American lives by way of CSR efforts

Indian tech industry has had a very profound positive impact on the American economy and by
partnering with India, America is able to alleviate skills shortages and continues to be more
innovative and competitive globally. Because of this very fact more than 75% of Fortune 500
companies leverage Indian talent either directly or indirectly.

Tomorrow if US makes sweeping reforms to curb movement of Indian tech workers than it will
only prove counter-productive and hurt American companies more. If movement of skilled
workers is curtailed then it will also lead to increased offshoring of jobs out of the US.

4. With the rise of automation and artificial intelligence (AI) technology, outsourcing demand
for technology companies in Europe and America is decreasing. Recently, the New York
Times article said that in 2020, IT industry in India feared half of its employees were
unemployed. How would you rate the news? What is the actual situation of the service
outsourcing industry in India? (800-100 words)

The threat to the jobs from automation is very real but is not just curtailed to Indian IT sector, it
impacts every sector and every country simultaneously. Technology is causing paradigm shift on
the traditional model of doing business. Here is the evidence:
- The biggest content creator company does not owns any content
- The biggest taxi provider does not owns any taxis
- The biggest online retailer in the world does not owns any inventory
- The banks dont know whether they would exist tomorrow
- Automotive companies are becoming more of IT companies because their IT spends are
constantly going up with concept of driverless cars, autonomous cars, connected cars.

There are numerous such examples in many sectors across the world. But one thing that no one
would disagree on is that tech will touch our lives in more ways than one and IT spends will
continue to grow and increase rapidly. Which means tech companies will continue to make more
revenues. In other words, there will be more jobs in technology in the future but nature of those
jobs will be different than today. Hence, there is need for re-orientation and re-skilling of the
workforce so that they remain employable in the future. India is taking giant steps in this regard
to ensure disruption in the tech sector due to automation is minimal.

Same is true of China manufacturing industry as well concepts such as Industry 4.0, Smart
Manufacturing will only mean automation and increased spends on the IT. So does China
considers Industry 4.0 as an opportunity or a threat to Chinas manufacturing jobs? I guess
overwhelming answer is opportunity because change is inevitable and we need to constantly
adopt and absorb the change and move up the value chain.

5. The global contracting market is favored by India IT enterprises, but the global successful
experience of India IT enterprises in China seems to be unable to replicate. So, in your
opinion, what is the root cause of the bottleneck in the development of India IT enterprises
in China? (600-1000)

The revenues from the China market for the Indian tech industry is about 1% of the total
revenues. And it would not be wrong to say that China is a market where emulating global
success story for the industry has been a tiresome job.

Its not that Industry has not made the investments into the region but the market dynamics and
language barrier have been difficult to penetrate. Some of the reasons why India has not been
able to show modest growth is because of several reasons some of which are outlined below:

- Services culture: Indian companies are mostly service providers and China market is not
service oriented market but welcomes product
- Language: This again is challenge at customer-end more than the for service providers
- Local Govt procurement norms: Govt is the biggest buyer of IT and because of
preference for local suppliers and implicit norms that favor local suppliers from Indian IT.
Our endeavor is to create the environment of trust so that business flows.

6. How do the enterprises in India seem to have opportunities in the Chinese market, and what
changes do you think they need to make? (600-800 words)
China opportunity has promised a lot but delivered little to Indian companies because the overall
market has not yet grown to the size that would gel well with the size of the economy. On the
other hand, there are hundreds and thousands of items that India buys from China and this
causes huge imbalance of trade between the two nations. In the longer run this imbalance will
have to be addressed else it will lead to demand destruction even for Chinese companies in the
Indian market.

Going forward, because China does not buys what we sell hence we are now changing our
approach to the market of that being a true partner then a supplier. Traditionally, Chinese
companies are very good in manufacturing and India has the software prowess and when we
combine hardware with software you get Internet of Things (IoT) and smarter products that the
world demands today. So there is natural win-win for both Chinese and Indian companies to
collaborate and come up with world-class products. This new Digital revolution has opened up
possibilities for companies from China and India to partner together to co-create and develop
world-class products for the global markets.

Our endeavor is to build trust on both sides through these exchanges so that business
partnership could follow.

In the regional spaces because business in China flows through Provinces and Cities we are
looking for genuine partner(s) who could help us create trust and act as bridges on both sides so
that partnerships could happen. Any Province or State that is ready to walk the talk on this idea
of co-creation should connect with us. Markets in China and India are large enough to ensure
that ideas that germinate through our efforts will always be making money while connecting two
large neighbors.

7. As we know, many American Indians vocational management of many well-known

technology companies, Microsoft CEO, Tia Nadella, GOOGLE CEO Sundar Pichai are two of
the outstanding representatives, in your opinion, why Indians can achieve such results? How
do you evaluate the situation of China's management in the field of science and technology?
What do they lack? (600-800 words)

These people and many others have achieved this position of repute by their sheer
determination and hard work. Its extremely critical for these organizational leaders to be
visionary to ensure these companies continue to be world leaders in their domains. And this
vision comes from operating in similar market economies that are free economies where
individuals coming from very humble background from India could go on become leader of such
organizations. Having operated in similar market dynamics and realizing the untapped potential
of emerging markets is they key reasons why Indians have enjoyed this success.

There is no dearth of such people in China as you have your own heros that world looks upto.
But due to lack of services culture it hampers long term vision, management experience and
exceptional handling that is so very required in making of successful organization.
Controlled economy model has its own advantages and disadvantages. Advantages because you
are able to get things done and have large portion of pollution being positively affected and
disadvantages because it just dwarfs off individual talent and risk taking abilities of the
individuals. Controlled economy model in way promotes oligopolistic structure whereas free
market economy promotes risk-takers and creates these idols and companies.

8. NASSCOM is one of the important reasons of India service outsourcing industry to succeed
in the world, can you introduce the establishment and operation of the organization is to
help India, the development of service outsourcing industry in what areas? (1000 words)

Even though NASSCOM is members driven organization but it is still considered as thought leader
of the sector which means that it is not only focused on helping its members but helping the
larger ecosystem and the country. We at NASSCOM are driven by passion to be able to positively
contribute towards making positive impact of the economy at large, companies that operate in
the sector and human assets that form the core of the industry. For us country comes first and all
our interventions are guided to make India a better society to live in and are proud of our efforts
rather than driver by revenues of our members.


NASSCOM is the premier trade body and the chamber of commerce of the IT-BPO
industries in India. NASSCOM is a global trade body with more than 1800 members,
which include both Indian and multinational companies that have a presence in India.
NASSCOM's member and associate member companies are broadly in the business of
software development, software services, software products, consulting services, BPO
services, e-commerce & web services, engineering services offshoring and animation
and gaming. NASSCOMs membership base constitutes over 95% of the industry
revenues in India and employs over 3.1 million professionals.

NASSCOM's Vision is to maintain India's leadership position in the global sourcing IT

industry, to grow the market by enabling industry to tap into emerging opportunity
areas and to strengthen the domestic market in India.

NASSCOMs strategy towards achieving these objectives:

1. Strengthen the brand equity of India as a premier global sourcing destination

2. Partner with Government of India and State Governments in formulating IT
policies and legislation. Partner with global stakeholders for promoting the
industry in global markets
3. Forge partnerships with foreign stakeholders for creating partnership platforms
4. Strive for a thought leadership position and deliver world-class research and
strategic inputs for the industry and its stakeholders
5. Expand the quantity and quality of the talent pool in India
6. Continuous engagement with all member companies and stakeholders to devise
strategies to achieve shared aspirations for the industry and the country.
7. Encourage and facilitate members to uphold world class quality and service
delivery standards
8. Aim to uphold Intellectual Property Rights