Outsource capital running out of sources

Miranda Kennedy Mar 19, 2007

TESS VIGELAND: The Boston Globe’s labor union launched an ad campaign today. It hopes to stop its parent company, The New York Times, from outsourcing jobs to India. More and more companies are setting up shop there, but it’s not always as easy as it’s billed to be.

From New Delhi, Miranda Kennedy profiles one businessman who’s found the employee pool is shallow and the bureaucracy is deep.

MIRANDA KENNEDY: Yash Kumar works for Stryker, a medical devices company based in Kalamazoo, Mich. When the company couldn’t find enough engineers to fill 55 openings in the U.S., they didn’t sweat it too much. They did as many other U.S. firms have done and moved to India, to draw from the fabled vast pool of English-speaking talent.

But it didn’t take Yash long to realize that all those other companies had already drained the pool.

YASH KUMAR: There’s been an over-demand. Everybody, every industry is trying to be here. And that’s created a big gap. That skill that everybody’s looking for — the college graduates with engineering degrees and good communication skills — got just tapped very quickly.

A recent McKinsey report predicted India will be short half a million skilled workers by 2010. Yash is interviewing dozens of candidates each week to fill about 150 positions.

Yash was born and raised in India. But when he came back after living in the U.S. for 13 years, he was shocked to find a dearth of workers, and a changed work ethic among candidates.

Tech workers cavalierly hop jobs, sometimes every few months, often doubling their salary at each stop. They don’t necessarily want to flaunt this to a potential employer. But Yash says sometimes, cockiness gets the best of them and they slip up. Like in this interview.

KUMAR: Five years from now, where do you see yourself?

JOB CANDIDATE: That’s a very difficult question. I’m . . . frankly, I mean, I haven’t thought about five years. I’ve just thought about two years, lets say one or two years . . .

When the candidate made this comment, a kind of distress flare went off in Yash’s chest. This was round eight of interviews. For Yash, it meant starting all over again.

Then there’s bureaucracy. A kind of red tape hell that’s epic, if not Biblical. To get a license to sell hospital equipment in India, Yash had to sign 15,000 forms. No surprise, then, that a World Bank survey called the “Ease of Doing Business” found India languishing at the bottom.

Carmine D’Aloisio, with the U.S. Commerce Department, puts it primly.

CARMINE D’ALOISIO: There can be a lack of transparency. Regulations are still being written in some areas, and if you’re trying to get your product approved, your medical device approved, it may take a little longer.

It may also require CEOs to grease officials’ palms, which D’Aloisio cautions U.S. companies not to do. That’s because doing so puts a big dollar sign bull’s eye on the executives who become known as bribe-payers. Once marked, everyone will ask them to cough up.

The Commerce Department offers a paid service to help small firms figure out how to navigate India’s maze of tax and licensing laws without paying bribes. Officers identify potential Indian business partners, solve disputes, and even try to explain the cultural differences of working here.

One difference Yash is struggling with is the demand to socialize more with his colleagues.

KUMAR: You know, I’m still transforming from in the U.S., you know. Your personal life and your work life, even though we were in a small town, is very separate. You know you’re not expected that you will socialize a lot with people at work.

Yash says when he lived in the Midwest, he was usually home by 5 with his cellphone switched off.

In India, the official work day extends til 7 or 8 p.m. And then, there are weeknight dinners at partners’ homes and long family picnics on weekends. He says this custom is less about making deals than building trust.

KUMAR: People don’t want to do business if you don’t come through somebody. Because there’s a level of trust that needs to be developed. There is cheating, there is corruption, there is so many things that don’t go well. And that’s the hard part, if you’re looking at, you know, small American company coming here.

The only thing to do, he says, is resign himself to packing picnics and playing with his business partners’ kids on Sundays.

In New Delhi, I’m Miranda Kennedy for Marketplace.

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