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India at the Tipping Point

Back in the year 2000, Malcolm Gladwell’s book The Tipping Point zoomed up the bestseller lists and became quite a conversation piece. At a seminar I attended recently, organised by market research firm Market Probe, copies of the book were handed out. I’ve since read it, and been totally sold on the concept—this is one fascinating piece of work. Gladwell essentially shows, through engaging and intriguing examples, how, throughout history, little things have made a big difference. Rapid change, where none seemed possible, has been effected with the right kind of impetus, and often without any profound or expensive struggle. The Tipping Point then is that instant when an idea, a belief, a trend, a business or a movement, crosses a threshold, spreads like wildfire and assumes epidemic proportions.

I believe that India is now on the verge of one such Tipping Point that will transform the country from an economic dawdler into a powerhouse. Several factors, events and developments in the past few days and weeks have led me to this belief.

At the Prerana Business Meet 2003, sleekly organised by the management students of the National Institute of Industrial Engineering (NITIE), speaker after upbeat speaker, representing the cream of corporate India, made a case for a resurgent India. The students responded with gusto and enthusiasm, rather than the cynicism and disillusionment that’s so often the norm. There’s nothing more invigorating than sitting beside simmering youthful fervour that’s inexorably soaring to boiling point.

After a bountiful monsoon and bumper harvests, the stage is set in India for record GDP growth this fiscal—about 7 percent, and maybe even approaching 8 percent according to some estimates—far better than the 5 percent average growth of recent times. Two or three years more of this and the Indian juggernaut would have moved into high gear, bringing into sight that astonishingly awakened Chinese giant.

Meanwhile, labour productivity has more than doubled in the country since 1985, says the UN Conference on Trade and Development, and almost every other economic metric is on the upswing.

As was predicted in these pages, the Indian software industry is buzzing once more. “We’re going to have some very very satisfying quarters ahead,” we told you. Well, if you’ve been following the quarterly results of software companies, you must be quite satisfied by now, surely. And it’s getting better—orders continue to flow in thick and fast and billing rate pressure is easing up a bit too. But y’know what’s going to be even bigger? BPO—Business Process Outsourcing.

In his book, Gladwell writes: “What must underlie successful epidemics, in the end, is a bedrock belief that change is possible, that people can radically transform their behaviour or beliefs in the face of the right kind of impetus.”

I think that BPO fits the ‘impetus’ bill perfectly. Not because BPO firms require behaviour transformation such as speaking with foreign accents or assuming alien personalities, but because hundreds of thousands of young people across the country are getting economically empowered with salaries at levels several times higher than the crumbs they had to scrounge for earlier. Not having to worry about tomorrow’s lunch anymore sparks a behaviour transformation that has a cascading effect on quality-of-life betterment from multiple angles.

I find it amusing to read the wail mail of our numerous armchair intellectuals bemoaning the ‘dehumanising drudgery” of call-centre work and lamenting the creation of what they deridingly term “cyber coolies” (as if the few work opportunities that existed before the BPO boom for the average college graduate were all sophisticated and chic!). Debate apart, the real point is that the huge positive economic impact far outweighs any social implications, and definitely qualifies as a powerful Tipping Point.

Consulting firm KSA Technopak estimates that young Indian college graduates have $10.5 billion in cash at their disposal, and spending is increasing at 12 percent a year (double the GDP growth); meanwhile, the National Council of Applied Economic Research cites a burgeoning Indian middle class—a 17 percent increase in just the last three years, they say. Bikes, cars, TVs, fridges, washing machines, cell phones, you-name-it: dreams and fantasies are fast becoming reality for the erstwhile deprived.

But it’s a Tipping Point, not a silver bullet. Sure there will be many pitfalls on the BPO path to nirvana, what with over-hype, over-valuation and over-capacity—yet I’m confident that India is now capable of sidestepping and even leaping over the pitfalls. What bolsters my confidence is the fact that Indian BPO is moving beyond call centres and that HR heads of this nascent industry are equipping themselves with innovative means to handle the huge human resource management problems that arise from hiring 300 new people every single day and from attrition rates that approach 50 percent.

Forrester Research’s John McCarthy—that erudite analyst who set the cat among the pigeons with his “3.3 million US jobs will move offshore by 2015” statement—is quite convinced that the media spotlight on job losses is a good thing for India. While some construe it as fuelling a backlash, it is this very publicity, he says, that is drawing the attention of CEOs who have not yet been seduced by offshoring charms. Every article that talks of job losses also focuses on the cost savings, and that’s very compelling stuff indeed. Applying the diffusion model, we’ve just about seen the Innovators and the Early Adopters go offshore. The deluge though, is just around the corner.

And hey, Goldman Sachs now says India will be the third largest economy in the world by 2050. When that happens, don’t forget what it was that tipped it over for us all.

Val Souza, Editor

valsouza@expresscomputeronline.com