I get this question all the time. With over ten years of experience in outsourcing, I have learned plenty about what to do, and also what NOT to do. Here are some nuggets of wisdom (or trial by error) from my experiences, as they relate particularly to India, where Blueliner has had a presence for the past four years.
Where to start.
Of course, it depends on what type of operation you are looking for in India. The skill sets are broadening rapidly, beyond Programmers and Customer Service Reps. Citibank recently announced the moving of nearly 10,000 additional jobs, in research and investment banking, to India. Let’s work on the small scale, assuming that you want to open a 5-10 person web design or development office in India. The first question to be answered is - Where to go?
My first piece of advice, if you have not done so already, is to work with a consulting firm and or freelancers first, until you find one or two people that you are comfortable with, and feel you can count on. Naturally, if you have some contacts in India, it is favorable for you to speak to them about finding some local talent. One of my best friends from college, Yogesh Maurya, a native of Hyderabad, helped Blueliner get its start in India by referring a trusted HR company, that recruited and housed our staff initially. It was really a good situation, because of the trust level I have with Yogesh - I knew he wouldn’t make a bad referral. If you do not know somebody though, you can build that level of trust by working on smaller projects with local consultants. It will just take more time this way.
Some of the hottest cities for web development, which is our main interest, are Hyderabad, Banglore, Pune and Chennai. All are viable choices, with a plethora of hungry talent coming out of Universities looking for work.
GO THERE.
I can’t stress enough how much of a difference it made for me to go to India. I got to bond with our team, seeing people for the first time, who our U.S. staff had been working with already for over a year. Getting to interview new potential employees in person proved to be much more useful than doing so over Skype. I got to know the Blueliner India team well, in addition to learning about the culture, and of course eating a lot of Indian food, one of my favorites. It was an amazing experience, both personally and professionally, which I hope to tell you more about. Via this blog, you will have a chance to see highlights of my recent trip to India (November - December 2006), which is being edited as we speak. Dali Singh and I are planning to make the next trip in July, when we will visit our rapidly-growing Bangladesh team as well.
If you are not willing to go to India, then I would say that opening your own office there is not advisable. Although Blueliner was able to open there remotely, it was an intensive process, that makes sense as long as you plan to go there soon thereafter.
- Registering your company, especially if your U.S. company is not Indian-owned, is a time-consuming process. You need a good local accountant and business advisers. Connections to government officials and other influential residents in the city that you select can only help to expedite the process.
- It’s getting more expensive. Inflation was around 18% last year, meaning the cost of living, and hence, salary levels, need to go up correspondingly.
- Beware of hidden costs. Things like backup Internet connections and office attendants (or as one of our managers put in an expenses spreadsheet as a line item, “tea boy”) add to infrastructure costs, and need to be budgeted.
- Good leadership makes all the difference. That principle seems to make sense anywhere, doesn’t it? In this case, it’s even more important, because of the distance and culture gap. And believe me, there is a culture gap to be bridged. Good leaders, that communicate well in English and are highly organized as project managers, can help build the kind of productive culture that you need, which also builds loyalty and retention.
If you have any questions about getting started in India, please feel free to contact me. In the coming months, I will talk more on this topic, as well as on getting started in Bangladesh and China, two other countries where Blueliner has a presence.
April 16th, 2007 at 2:29 am
India does have some advantage that makes it a natural choice for outsourcing. India has a highly educated workforce, with two million college graduates a year, all of whom speak English. And companies are moving lots of white collar tasks like IT and accounting to India.
But, the advantage of this potential workforce has been mainly enjoyed by the big Companies. Its really hard for a small company to operate a remote office with limited resources. But small companies, too, need to come to countries like India and Bangladesh, and China. Larger companies are utilizing lower rate of labor from these countries. If smaller companies do not come forward as early as possible, they may face a sudden competition in production cost, that may throw them out of business.
And, moreover, India, Bangladesh, and China, jointly have a population of more than 2 billion, which means a lucrative market for any business. These three countries have a large number of consumers, to fuel any type of business. And the local businesses are not yet that much matured. I believe any global company can benefit from the cheap workforce and large consumer group.
April 16th, 2007 at 2:59 am
India is a great repository of brain, no doubt. They are getting used to what is current demand in the world, specially in IT. In this age of outsourcing they are already ahead of other Asian countries. Even then there is a point if you are trying to expand your company there - selection of appropriate talents is more tough then you can guess.
India, China and Bangladeshi people are coming up with an excellent skill sets. Though communication skill is a problem but its increasing. So small and big companies should think to use these skills to go ahead. Probably for small companies main problem to start is not costing but communication. Thanks Arman to share his experience of expanding his company there.
April 17th, 2007 at 11:59 pm
Mr. Hasan made an important point about the size of the markets in Asia. One of my purposes on the upcoming trip to India and Bangladesh is to survey the marketplace, to see how Blueliner can start offering our services there, where the middle class and their disposable incomes are growing quite nicely.
April 18th, 2007 at 12:51 pm
Well, I hope that you will find Bangladesh as promising as India. Some American and European company has already established their Technical office and support center in Dhaka , and they are very happy about that. I could name some like Therap, Escenic, Somwherein, and many others.
But I would like to know about your expectation from a country like Bangladesh.
. I wish you a successful business trip there.
April 21st, 2007 at 3:25 am
I can say India is the best choice for out sourcing ,here you will get the people of all expertise.Important thing is in India Communication is not a problem.Thanks Arman for sharing your experience
April 21st, 2007 at 2:16 pm
If India is the best choice, then , why companies are coming to Bangladesh, or other countries like that ? The choice could be very simple for Large Companies, it is obviously India. But a smaller company would not be able to attract the best talents of India. I just want to say that, the best choice is not India, it depends on the need and the ability of the company.
April 22nd, 2007 at 2:21 am
I totally agree with Mr. Hasan and I believe that the statement “India is the best choice” is outrageous. It is because if India was the best choice, then Indian companies such as TATA would not be barging at Bangladesh’s door for investing. And also, India gets the advantage of having a high density of people of all expertise is for the fact that India is a sub-continent. And about the communication factor, I wouldn’t really agree that communicating is not a problem in India from personal experience (I have been to India quite a few times and have faced major communication difficulties).
April 22nd, 2007 at 2:32 am
Well, India took some very good initiatives decades earlier to make IT as an important sector and that’s why they are much more focused or highlighted I should say. But Indian people should not stick to the belief that they are the best choices for outsourcing. The world is competitive. Good communication is of course a good strength but at the same time this strength can be imitated or built by others. Like Chinese are trying. So `Best Place for outsourcing` would require a little more consistency in the long run.
May 23rd, 2007 at 4:45 pm
Outsourcing in general something that must be considered long and hard before it is actually done. Simply be is the cost of outsourcing going to be less then the benefits you do get out of it, and even then whether or not the costumers will feel a major impact. For smaller companies outsourcing I believe should be done not directly but through other companies. For example Company A makes teapots, and its costumer service department while not large is expensive. Going to India for such a small company on its own would probably just as expensive if not more. On the other hand working through a company that specializes in outsourcing would be less expensive. So Company A should contact a company that just does costumer service, an analogy could be made to shipping, very few companies deliver their products physically, they usually use UPS, Fedex, USPS, etc… , the same idea could be applied here.