Aliens change the future of technology in East Asia
EkaLore has written about the changes as Amazon and other technology-focused enterprises act as Alien Invaders into a tradition-focused market economy like India. We revisit this topic and take a course set out by Jean Jacques Servan-Schreiber, who wrote about societal confrontations with radical change. This is the first in a three-part series where we explore challenges to existing organizational structure and approaches in India, potential solutions, and a final call to action.
In earlier decades India has struggled to transform its immense educated populace into a global advantage. Realized as outsource services and process driven by economic choices in cloud computing, personal devices, and communications infrastructure, with reduced adherence to tradition as skill capabilities and market needs combine – all of these societal processes are rebounding and echoing into East and South Asian societies.
The inevitable effects of changes to globalized service providers in a post-Covid economy will force changes on enterprises previously constructed and optimized to service customers in the USA, EU, and elsewhere. Indian business models dependent on retaining control of highly specialized and skilled labor are confronted with border controls (i.e. H1-B visas), ‘holding costs’ of paying talent not currently creating revenue (business models for talent resources), and the perishable nature of technical skills previously in demand (or that don’t translate to domestic bureaucracy process and paperwork).
People and skills developed by outsourcers to aid foreign client enterprises require new structures to obtain revenue and attain sophistication. Hopes for economic viability in domestic markets must be tempered by the substantial differences between foreign and domestic markets. Organizations will be challenged by a reduction in foreign currency earnings, a change in revenue streams driven by distinct financial calendars, and using a talent pool with skills and certifications not used in the domestic markets. In sum the Indian enterprises so challenged will need restructuring and reengineering, not merely tinkering with business models.
The competitive nature of global service providers faces new challenges. The structures of ‘software factories’ with advanced high-level operations at high capability and maturity challenge the premise of talent-based staff models. Local-market based development labs (EU and USA companies basing global operations near low cost (by comparison) pools of talent) gain desirable cost profiles for global enterprises without the profit margins of service providers and gain them geopolitical benefits.
The once unique advantage of a relatively low cost highly educated workforce has faded. Emerging competitors in other developing countries challenge from lower talent costs and focused business model attacks. These challengers are using the same advantages used by Indian (now) incumbents. Indian service providers grew knowledge and capabilities over a generation only to see competitive and development model changes rewind advances and diminish advantages in a few years.
A simple view sees ‘remote work’ and ‘move the work to talent’ as highly viable. In reality, if service providers could conceive, develop, deploy, and operate global operations then the competency could be used to compete with customers by creating new Indian enterprises at global scale. Opportunities, know-how, and capital to act at a global scale have yet to drive operations at service providers to become global competitors to their customers. Existing service providers are not prepared to risk competing with, and losing, their customers to deliver goods and services at global scale. Working in a large global scale enterprise is distinct from operating (or acquiring) and managing a long-term strategy that drives successful global enterprises.
Part 2 discusses elements that help and hinder India's successes
Read these and other posts at www.ekalore.com/blog-1
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