A short and circular story of outsourcing


Manyata felt depressed and uninterested in work. Shobhit Babu, her manager in ProsiNix – company where she worked, knew her situation but could not help her. Shobhit Babu had bigger concerns. It was this month of may, 2013 and a host of engineering positions were being closed in India in favor of relocating them to US.

Shobhit babu was fairly convinced – President Obama had no role to play here. Anyways, he focussed on motivating his team. He was very proud of his team having delivered multiple innovative products that added to top-line of the company. Shobhit Babu tried to explain – ProsiNix has a need of new products to be developed along side customers and majority of them were in US. Still, It was beyond his understanding, on why his product was being moved to US for further engineering work.

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ProsiNix, one of the star US IT firm recently celebrated its 10th year of existence in India. Looking back from 2011, It was a great decade for ProsiNix in India by all means. A decade back, ProsiNix was like one of the many firms affected by the great crash of stock markets in year 2000.

It was a glittery time before the crash of 2000. Many investors flocked to invest in the stock market and claim their share of Gold. Any & every project got funded and P/E ratio were touching unheard levels. A perfect time for being entrepreneur.

ProsiNix’ CEO Mr. Henry Whittman was not convinced. His family  had seen the worst of 1929 and 1980’s crash, and he believed it was just a gold rush pending doom. Like any smart businessmen, however, Whittman was also determined to claim his share of the gold till the rush lasted. ProsiNix floated an affiliate MoneyNix.com which was 80% owned by ProsiNix and rest was in public ownership through stock market. Moneynix.com was nothing more than a web-based arm of its core business. Not surprisingly, ProsiNix used Moneynix.com to sell its own products through internet. As Mr. Whittman would have liked, Moneynix.com created $$$ for the parent (entirely through stock market).

Crash came soon and nixed all the stars and entrepreneurs in the bud. Moneynix.com once valued higher than ProsiNix, was all dust. After 2000, its valuation had hit rock bottom and Mr. Whittman had no problems in buying its stock back from willing sellers for as low as 1 cent a stock.

Whittman was proven right. Though, he was about to get worried on other fronts. Money was fast disappearing from tech market. Salaries had remained constant though revenue had fallen to all time low. Whittman had a choice to invest either in marketing or in engineering. A classic chicken and egg story.

Elsewhere in services industry, Indians had come with their english and the claim of saving the world from Y2K disaster. They knew how to code and more importantly remain transparent. Realms of process, reports, meetings and resultant control was established for clients. Service Industry could offer low-cost with a claim for quality. All perfect!

Whittman liked the story, but he decided to choose India over Indians. Why he could not do the darn thing himself?

And so it happened. Whittman flew down to India and established ProsiNix India centre In sleepy metropolis of  Revanagar on the banks of pious river Narmada. Talent was abundant and importantly at a lower cost. Whittman set the rules of the game. A team had to prove credentials to take up product ownership. Starting with QA work, he hoped that in next five years he could offer ownership for all cost aligned roles to engineers in India.

———————–

Samantha was feeling all depressed and uninterested in work. David Hart, her manager in ProsiNix, company where she worked, knew her situation but could not help her. David had much bigger concerns. It was a month of may, 2002 and a host of engineering positions were closed in US in favor of relocating them to India.

David Hart, was fairly convinced that it did not show lack of faith in his team. Anyways, he focussed on motivating his team. He was very proud of his team having delivered multiple innovative products that added to top-line of the company. David tried to reason out with his team. He explained the need of company to increase its engineering bandwidth by relocating jobs to lower cost destinations such as India. However, It was beyond his understanding, on why his team’s innovation was being moved to India for further engineering work.

———————–

Circa 2010, Whittman was extremely happy on the success of his India venture. In last 8 years not only he had reduced his R&D costs to match the competition, he also had more money to throw at ProsiNix increasing marketing budget.

However, he was concerned about the impact of continued slowdown in US. It had lasted for far too long. Customers were demanding innovation to cut security costs and wanted oversight on whether their suggestions were being taken on board. A depressed job market also added to his concerns. After all efficiency due to cost arbitrage had its limits. Many a times he wondered if he had reached the critical balance ratio between US and India teams.

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Needless to say, all characters and incidents in this story are fictional apart from President Obama, US and India!

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Posted on January 31, 2012, in Outsourcing, Product Engineering and tagged , , , , , . Bookmark the permalink. 2 Comments.

  1. Do you really think jobs can be relocated to the US now? No one will try that now. If any company closes shop in India, it will have an Indian competitor springing up in no time.
    By the way, it’s well written. I could read the entire length without getting bored. 🙂

    • I do not have the crystal ball, however how many early stage products get engineered out of India? If I innovate and put an idea on the table purely from India, does it create insecurity aspect. Current trend of product outsourcing is aligned to cost. I am hearing enough stories from a lot of my friends in product companies.

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