As recession appears to take path of recovery and economy on the verge of boom things look brighter for 2010. Apart from expecting a good and stable job market prices are also northwards and day to day commodities expected to be more and more expensive.
So all in all we again end up on same track. More salary (expected), but more expenses and more costly EMIs. Whatever we face here, but for Europe and US, India still remains low cost center. Despite Obama’s warning about cutting the tax soaps to all companies who outsource work outside US, things appear bright here.
I have been associated with OEM (Original Equipment Manufacturer) companies during my previous assignments and strongly believe calculated expansion/investments here in India reap more benefits rather than investing in suddenly. Few companies who have invested heavily looking on short term gains have laid-off people soon after the recession due to problems back home. Also these companies suffered because of lack of knowledge on Indian job market conditions. Paying higher salary helps in getting good talent, but it also has long term effect on profit margins of the organization and also delays break-even.
But there are some companies who follow a different approach before actually investing heavily here on Manpower as well as infrastructure. A Swedish auto and aero major company with which I had a brief stay for more than a year followed more systematic and calculated approach. They found, it is less risky to hire contract employees from service companies rather than hiring directly on payroll. This had helped in establishing not only a good Indo-European work interface, but also made sure to believe guys back in Europe that Indians could definitely do the work. Within couple of years as the work started to offload more from Europe, India center started hiring more and more people. Many of them were contract employees, who were looking out for a change from the services to OEMs. Though this is a relatively slow process, but surely yields more ROI. As these are the people who were actually aware of the process and work culture. Hence no need to spend on training or any other skill improvement.
In worst case of closing down any unit due to bad economy or any other unforeseen risk, contract employees could be sent back to the respective service companies and permanent employees can be relocated to other facilities. As this did not happen in the initial phase and already things start to move, there is less chance of LOSE-LOSE situation here.
One more important issue in Engineering services is the investment which is quite high compared to software business and also the delayed break-even period.
All in all, engineering outsourcing done in a systematic way by maintaining optimal resources back home and maintaining systematic investment approach proves to be more beneficial. But this should also create more opportunity to people out there in US and Europe rather than laying off folks back there and going on hiring spree here. As mentioned earlier, one should look at WIN-WIN situation thereby improving both economies.
The real world.. 