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India competes U.S in competitiveness
si Team
Tuesday, March 1, 2005
The cycle has come a full circle. After years of domineering global business arena and technological innovation, the U.S is fast losing out to India in business competitiveness, says a study by global consulting firm A.T.Kearney. Indian companies will soon surpass American rivals in technological innovation, and emerge as reckoning force, the study says.

Indian companies today are nearly as formidable competitors as any well-operating U.S. firms, particularly in the technology and telecommunication niches. The study that was called the ‘Crunch Time’ audited competitiveness between both the countries’ companies. There is said to be a dramatic realignment of global competition, including the rapid rise of India as important new center of competition, says the report. In fact, U.S. executives point to India companies as a source of competition over the next two years.

“U.S. companies’ risk-taking attitude is falling behind global forces that are reshaping the
competitive landscape in technology and telecommunications,” said John Ciacchella, a Vice President of A.T. Kearney’s High Technology Practice. “The shift from enterprise to consumer; new global players from India; industry consolidation; and next wave technologies such as VoIP, digital media, 3G, broadband to the home and WiFi/WiMax are all factors driving big dislocations in the market. U.S. executives clearly feel the pressure of these changes and most rate their efforts to respond as fair to good. This is not good enough. Too few are putting in place the formal processes needed to adequately assess, act and measure their progress in this more intense competitive environment.”

Approximately 63 percent of U.S. respondents said their competition would primarily come from the United States, and 45 percent from India. Nine out of 10 executives polled said the competitive threat posed by Indian companies would likely intensify in the next two years.

Five years of extreme cost cutting have made many American technology firms downsize research and development departments. American managers have also given foreign competitors a boost by outsourcing important business functions for example from accounting to microchip design.

“Many overseas technology companies excel today in the very disciplines that North American executives say are crucial to driving competitive performance in their industry sectors,” said Donovan Neale, Executive Director of the BPM Forum. “Indian IT outsourcing companies like Infosys and Wipro have built exceptional customer intimacy and dependency with North American companies.”

According to the survey, the reason for American companies not being able to compete is that many companies have not instituted formal practices for tracking and analyzing competition. Many executives who were surveyed said they de-emphasized product innovation and customer service, focusing instead on cost cutting since the technology industry began flagging in 2000. “At one time, the U.S. was head and shoulders above the rest as the most competitive market, but there’s been a big shift,” says Neale. India is now on the same level as the U.S. in terms of competitiveness.

The study shows North American executives are acutely aware of increasing global competition. North American companies are increasingly turning to offshore operations and outsourcing as a means of coping with overseas competition.

Approximately 90 percent of survey respondents said they expect competition in their sector to intensify in the next two years.

While respondents cite the cost of skilled labor as the most important factor driving offshoring decisions, it’s also the access to local markets, innovation capacity and speed, and intellectual capital that are identified as important drivers.

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