CAPITALIZE WHAT WE ARE GOOD AT / OUR COMPETITIVE ADVANTAGE

Leveraging our Engineering Talent

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I have no quarrel with our ( about to be released ) “ Industry Policy “ which plans to raise the share of “ Manufacturing Sector “ in our GDP from the current 16 % to 25 % by 2022 ( - when GDP is targeted to reach $ 5 Trillion )

No doubt our Policy Makers must have figured out the  CAPITAL INVESTMENT  that will be needed to reach this target ( Land – Buildings – Machinery – Inventory  etc )

It would be interesting to know what “ Incremental Capital Output Ratio “did they assume for the “ Manufacturing Sector “

They might have , even some ideas on the possible SOURCES for these funds ( I hope , other than raising taxes ! )

But , if “ Manufacturing Sector “ and “ Service Sector “ were two horses in the GDP race , I would bet on the “ Service Sector “, especially from the following view-points :

·      “ Capital Investment per Job created “ would be much lower ( may be 10 % of  Mfg. Sector ? )

·      Jobs created would be much higher  ( may be 5 times of  Mfg sector ? )

·      Time ( to create those jobs ) would be much shorter ( months instead of years )

·      Export of “ Services “ are much easier than export of “ Goods “

·      Quality of our “ Services “ are comparable – or even better – than from other countries

·      We will , soon , have the desired quality / quantity of Internet connectivity , all over India

·      We are turning out thousands of Graduates each year though some need “ Skilling “

·      Salaries of our Engineers are 20 - 25 % of similar hires in USA – EU – Japan – UK etc

HERE IS SOME EVIDENCE :

[ source :   Despite Trump, US MNCs flock to India for engineering talent   ]

Highlights :

Years    /  No of  MNCs   /  Centres  /  Employees  /  Total Spend ( $ Billion )

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2016    /  943   /   1208   /   343,000   /   13

2017   /  976   /    1257   /   396,000   /   15

2018   /  1005   /  1295  /    435,000   /   17

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The numbers do not include MNCs’ IT and BPM ( business process management )

Including these , Zinnov had estimated that there were 1,571 centres and 815,000 employees in 2016

Types of Industries putting up Centres ( mentioned in this article ) :

·      IT – Automation – Banks – Professional Services – Telecom – Media – Entertainment

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Context :

Brain Inc 2.0     [  21  Aug  2017  ]     

 

Where I wrote :

 

·        5 lakh ( 500,000 ) engineers work in “ Tech R&D firms “ in India

o  $ 22 Billion was the worth of their work in 2015-16

§  This will nearly DOUBLE to $ 40 Billion in 2020

 

Now consider this :

·         By employing 5 lakh engineers , India’s “ Tech R&D Firms “ earned $ 22 billion . That

          works to a billing of $ 44,000 per man-year of R&D ( Export of Services )

·         I presume that the “ Manpower Cost “ constitute approx. 50 % of Billing Rate ( rest

          being OVERHEADS and MARGIN )

·         Hence , Indian R&D firms must be paying an average of $ 22,000 per year to its

          employees ( approx. Rs 1.2 lakh per month )

·         As against this , both , Indian as well as American firms pay ( on an average ) ,

          $ 88,000 per year to H1 B visa holders

         

·         With this kind of “ Cost Advantage “ , is there a possibility to do better than the

          projected earnings of $ 40 billion in 2020 ?

It is high time our Policy Makers launch a new initiative ( of Export of Intellectual  Property ) , called :

INDIA  :  the  BRAIN  FACTORY  of  THE  WORLD 

During an Interview with Business Line ( 16 April 2016 ) , the then CEO of Infosys , Vishal Sikka , said :

“ We have to re-imagine the notion of services “

In support of my belief  in the potential re-imagination of this “ Service Sector “ , allow me to quote Peter Diamandis   {  https://www.diamandis.com/blog/topic/web-3-0  ]  :

·      The Spatial Web is also giving way to “virtual company headquarters” and completely virtualized companies, where employees can work from home or any place on the planet

·      Delocalize with VR, and you can now hire anyone with Internet access ( right next door or on the other side of the planet )

·      Web 3.0 is changing the way we work, where we work and who we work with.

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13  Dec  2018

www.hemenparekh.in / blogs