Wednesday, November 09, 2005

Outsourcing and Dalit Human Capital

Discussions about the future of outsourcing to India paintdoom scenarios of how outsourcing can move away to lower costcountries. In India we have to bring the poor into the IT revolutiontaking place. That will prevent potential erosion of India'scompetitiveness. For thiswe need an action plan including

1. Better penetration of educational services and services to financethe education from primary level to the appropriate level ofeducation required for participating in the ecosystem

2. Affirmative action to drive the inclusion of disadvantagedmillions in the rain of outsourcing. This could be facilitatedthrough economic incentives like tax breaks based on disclosures ofcomposition of employees.

3. Reducing the cost of education and improving the accessability ofeducational services by leveraging technology to build nationaleducational grid (like the power grid), which any citizen can pluginto through e-Choupals.

4. Improving the effectiveness of manpower planning and employmentexchanges in the government, public and private sector.I am sure more crisp action plans can be evolved too.

I started thinkingabout this due to a report of Mr. Narayanmurthy's opinions on hiringdalits for Infosys. For higher quality employees, Infosys type companies could build cheaper human capital over period of time,instead of hiring ready (and costly) human capital from the non-dalits.

I fail to understand the economics operating here.Dalit human capital is cheaper in the Indian labor market. The realreason for not hiring dalit techies is not their merit (usually), ithas to do with fitment issues with the dominant culture of the workplace. Nothing new about these issues. Rigoberta Menchu has describedthem in detail.When the cost pressures increase, Infy will no longer have the luxuryto operate with the higher cost of non-Dalit merit. The market forceswill operate eventually.The key thing that the private sector needs to realize that there isan opportunity to leverage the low cost human capital of the dalitsby improving the internal multi-cultural management practices. Ofcourse such attempts may not give as much media value as multi-cultural attempts with Russian and Australian emploees.Basically Narayanmurthy does not want to rock a steady boat, till itsneccessary.

Pratap Tambay
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