Digital Desis or Giant Managers?

Fifty Eight years after independence the world is beginning to realize what most Indians always believed – that India is a great power and civilization. India’s recent economic growth has attracted the attention of strategic analysts and future forecasters everywhere. A three trillion dollar economy [PPP], fourth in size after the US, China and Japan] consistently growing at 6-7% per year cannot be ignored specially when it is backed by explosive growth in the key technology of our times – InfoTech. India’s phenomenal technological and economic growth in the arena of information technology is matched by developments in the nuclear sciences giving it an added strategic dimension that cannot be ignored both at the regional as well as the global level. The recent talk of India getting a permanent seat in the UN Security Council is a measure of the global recognition of India’s emerging significance.

Clearly economists and politicians in the US are cognizant even concerned with India’s emergence. People here are beginning to realize the growing dependence of the US economy on India’s software engineers. However in all this hoopla about Digital Desis, what is being overlooked is the growing role of Indians in management of the global economy. In the first phase of globalization that began with the transfer of low-end manufacturing to Third World countries, particularly Indonesia and China, it was believed that “they” would take the hard, labor intensive, less influential, low paying jobs, while “we” would retain the soft, high-end, managerial and control related, high paying jobs. But under the cover of the InfoTech explosion India has also precipitated another less recognized revolution. It is slowly but steadily taking over the managerial and even research functions of the global economy.

The Business Process Outsourcing [BPO] has alone witnessed a 35% growth in the last year in India [2004-2005]. The BPO industry includes not just the famous, low expertise, call centers that have become the signature of India’s new foray into global business management, but they also include, high expertise endeavors such as financial management, medical diagnostic services and technology research. While last year 20,000 American tax returns were filed by CPA’s based in India, this coming year will see over 200,000 tax returns processed in India by Indian CPAs. More and more American medical centers are outsourcing health services to India which range from patient scheduling to accounts receivable, including the expert reading and handling of tests and diagnostic reports from in the US.

Companies such as GE, Microsoft and others have established elaborate research and development facilities in India. India now produces more engineers, doctors and business managers than US and entire Europe put together. This large pool of low priced high expertise labor is sucking the heart of corporate America away from the continent of North America to the Indian subcontinent. General Electric’s John F. Welch Technology Center alone employs 1800 engineers [400 of them are Ph.Ds.] This center is located in Bangalore and provides R&D for thirteen GE divisions and has contributed 95 patents since 2000. Such developments and exploitation of India’s knowledge pool requires both management and entrepreneurial skills and the revolution in these areas are keeping India’s growth ticking.

Today there are over 800 universities and business schools that produce management graduates. The Indian economy now has sufficient sizes to absorb them and one finds that more and more students from India are traveling overseas to get management education. A couple of years ago I attended a peace conference in the building of the Asian Institute of Management [AIM] in Manila. I was pleasantly surprised to run into several people from Hyderabad, my native town in south-central India. I found that the largest foreign contingent of students at the AIM there were from India. Last year I was visiting Euro-Disney, a shabby over-priced, undersized, Kmart version of the original, located outside Paris with my family [this time the excuse was a UN sponsored civilizational dialogue in Paris]. In a mall near the resort I ran into many Indian students studying management in an Indo-French business school that did not require knowledge of the French language.

On chatting with both groups I found that these students were forced to go abroad to get management education since the competition for admissions to business schools in India was still tough. Some of them were mortgaging their family homes, and while others were marrying into rich families and using the dowry to support their academic ambitions. I remember in 1987 when I was applying to business schools in India, the competition then too was very tough. I went to S. P. Jain Institute of Management, which was then, and still is a top ten B-School in India. The school selected a class of 55 from over 150,000 [0.036%] who took the entrance exam. These numbers boggle the mind of academics in the US who are more familiar with 10-20% selectivity rates in Ivy leagues. Apparently the competition still remains as tough.

A quick survey of some of the major business schools in the US reveals that many of their faculty is of Indian origin. The presence of so many people of Indian origin in business schools gives India access to management expertise of world-class quality. Many of these academics now routinely do research and consulting projects “backhome” which provides a steady transfer of management insight to India. India’s technology revolution could not be fully exploited without adequate entrepreneurial and management skills. Just as India’s premier technology universities – the Indian Institutes of Technology [IIIT] – India’s response to Stanford and MIT have given it a competitive advantage in engineering, India’s premier B-schools – the Indian Institutes of Management and other top schools, such as XLRI, Bajaj, S. P. Jain, and Symbiosis are giving it the necessary capability to manage and exploit its exploding human resources.

India is today exporting management expertise. Just like its engineering graduates its management graduates too have dispersed all over the world. I left the corporate world long ago in search of a more metaphysically rich life – of all places in the U.S. But I do travel abroad and it is amazing to find how far and wide my business school classmates and colleagues have dispersed. They now work in the US, Canada, Indonesia, Singapore, Malaysia, and Hong Kong and all over the Gulf. In the Gulf it is impossible to visit any hotel or business without running into a manager from India. My wife is a graduate of one of India’s premier hospitality management institutes, the Indian Institute of Hotel Management and her class mates too work all over the world.

There are two things that are giving Indian managers a global presence. English is widely spoken and is the medium of most professional and higher education in India. Fortunately English is also the language of globalization. Secondly India since independence has zeroed in on instrumental education. This is important. India produces highly qualified technical experts who are actually quite badly educated. The focus has always been on providing encashable knowledge. As a result academic institutions quickly adjust to global market needs. Most Indian schools are poorly funded, have bad teachers and rely on the natural talent and hardwork of students desperately seeking to escape their third world reality.

In 1992, while working at my graduate school applications and travel to the US, I helped my engineering Alma Mater start a business school in Hyderabad. I was appointed as the Vice Principal of this “MBA College” and given a budget of Rs. 50,000 [US $1200] to buy books for its library. I personally handpicked every book the school started with, and then found a retired Price Waterhouse consultant to become its Principle [Dean] and a friend to teach courses in human resource management. The three of us taught all the classes between us in the first semester. Now the school is ranked 96 out of 800 in India and its graduates work in North America Europe, India, and the Middle East. I remember, we had none of the fancy tech stuff that we have here in the US, but we did use the books that were being used at Harvard Business School and we had real exams that were conducted externally.

India’s low investment high yield educational strategy is paying off big as a result of globalization. Indians armed with English, educational degrees and a strong desire to excel are exploiting every global opportunity. They easily edge out people from most of the developing world by being more education conscious and compete favorably with the first world by providing adequate services at significantly low cost. The growth of India’s economy is making more resources available to institutions and they are working to improve the quality of education thus making their graduates compete favorably with those produced in the best Universities of the World.

India’s digital revolution is giving its economy a much-needed kick-start, but it is its management revolution that makes it sustainable.