I am often complimented on the accomplishments of the Indian outsourcing industry and it is with great pride that I point out the achievements of this group. It is difficult to not be awed—at least slightly—when people refer to the ‘Big 4’ and one realizes that they refer not to the legacy of the U.S. accounting and consulting firms: KPMG, Andersen, E&Y, D&T, PWC, and so on, nor to game animals of the African continent: but to Wipro, Infosys, Satyam and TCS. The leadership of these firms has created value for themselves, their employees, and their customers, not to mention the seismic shift in perception of India-based companies and the correlating viability of India as a business destination. When over half of the Fortune 500 utilizes some form of outsourcing that leverages an India platform, the validation of the business case can be considered proven.

As an executive search professional, I have had the good fortune—in fact the privilege—of having seen this transformation first hand. Indian offshore coders came into the spotlight in late 1990’s during the roll-up to Y2K, and were seen as the best—and maybe only—hope in the race to full remediation. I recall contacting executives at leading U.S. IT service providers and explaining how my client was a growing and profitable IT company looking to build its U.S. leadership team. I recounted the firm’s capabilities and espoused its roster of premier clients. I would appeal to their egos and ambitions—how this was their opportunity to get in on the ground floor and contribute to the creation of a business, or at least the front end. Then I would play the ace card, the company had its delivery operations based in India where they could tap into a limitless pool of IT talent at a fraction of the cost of a domestic worker, if you could even find one that is! Just imagine the labor arbitrage opportunities. My well-laid elevator pitch was consistently met with incredulity. “India? what are you taking about? The people worship cows! There is no infrastructure, it’s a third world, poverty-stricken country.” It was also quite apparent that my lack of accent and seamless cultural integration based on 25 years of U.S. residence had completely disguised my ethnic heritage to this audience. And make no mistake, these were not amateurs but seasoned business leaders, Managing Directors, Partners and all flavors of Vice Presidents and Presidents—executives whose resumes represented firms held in the highest esteem by their offshore counterparts, producers whose incomes ranged well into the mid six figures and higher. I realized that my only hope in this quagmire of ignorance was the same weapon used whenever one meets ignorance—education. So I learned an important professional lesson: stop selling and start listening. I digested this market feedback and put together a simple, straightforward plan of action that included specific examples of successful projects and testimonials from clients. Using this approach I conducted what some clients have since described as a “one man PR campaign.” And eventually, we (myself and my clients together) were successful in attracting the talent that we so coveted.

Today the pendulum has swung the other way almost completely. It is hard to pick up a periodical or scan the pages of the newspaper without seeing some mention of outsourcing, or offshore and the inevitable connection to India. When recruiting for clients who are still emerging in this category, the enthusiasm and appreciation of the model is palpable. One might expect that a “if you can’t beat ‘em, join ‘em’” attitude has taken root with many U.S. executives who have seen their company margins eroded and quality indexes shattered by the proliferation of offshore providers. And in fact, many of the providers are still trying to attract domestic talent to be the ‘front ends’ of their offshore operating companies. These firms now see themselves—based on IPO’s and billion dollar market caps—as being in the proverbial driver’s seat when it comes to attracting these same executives who five years ago thought business and India were mutually exclusive. Some ITO/BPO firms now believe that they can essentially dictate terms and exercise a “take it or leave it approach” to hiring, but hiring is no longer the most pressing challenge, the challenge is now a matter of retention. This was another important lesson that I learned. In my professional adolescence, I had come to believe that a successful recruitment was precisely that, a recruitment defined by putting a person into a role or—as some have so eloquently put it—a backside in a seat. Today, my measure of a successful recruitment is the positive contributions and accomplishments of the successful candidate. These results can only be realized by the individual remaining in the position for some substantive period of time, making retention of talent one of the most important issues for the Indian ITO/BPO industries.

Statistics can be manipulated but in this case the evidence—anecdotal and empirical—demonstrates that Indian service companies have particularly high attrition rates in respect to the hiring and retention of non-Indian management and that the attrition rates of Indian workers offshore is rising as well. Experience has led me to identify two key factors amongst many in this conundrum.

1

In respect to the management dynamic, the strong cultural affinity between India and the U.S. has created a Catch 22. Indian professionals have done a remarkable job of assimilating themselves into the fabric of the American society, at least superficially. Dress, language—albeit often accented, education, political models (India and the U.S. represent the world’s two largest democracies) all serve to build a common ground in which many of us thrive. In most cases, particularly in dealing with Indian managers who are—in the broader scheme—relatively new to the U.S. marketplace, this is a veneer that masks a number of distinct philosophical and value-based differences that in the end lead to our speaking the same language, but not really communicating with our counterparts. The urbane, sophisticated gentleman whose courtly manners can be quite charming during the recruitment process is one example as once you are working for ‘his business’, that attitude can quickly revert to one more analogous to directing household staff than a professional company (see below). Of course, cultural disconnects are not unique to the U.S.-Indian dynamic but exists across a variety of cultures, none the less it is a legitimate challenge and we should learn from the mistakes of the Japanese, Koreans, Germans and others.

2

One of the first questions that I ask investors in businesses that have significant Indian management components is when do they think Indian executives are first exposed to management. The answers vary but it always seems to catch them off guard and at best a referral to IIT or IIM is put forth. I believe that this is far more deep rooted in that the typical Indian executive is exposed to management at the most tender of ages, in the very homes in which they are raised. Not to enter into social debate but these households traditionally employ some form of staff, full or part time, and in turn the matriarch usually manages this staff. This can be a benevolent dynamic or despotic, sometimes going as far as bordering on indentured servitude. When considering that many Indian businesses are in fact quasi-family businesses (not unlike a number of American companies, especially in industries such as cable television) a sense of entitlement can often supersede the practical application of balanced management methods. A senior U.S. executive has usually been developed in an environment where he or she has been empowered in a manner rarely seen in their Indian counterparts. The cultural affinity mentioned in (1) and the validation of the offshore model attracts these leaders but this latter social dynamic absolutely contributes to the challenge in retaining these senior employees. This is not intended as an indictment of Indian management techniques or home life but is intended to help people understand a significant cultural difference and highlight what is possibly the single biggest factor in management retention/attrition.

As effective as Indian service firms have been, and in no small part due the management philosophy described above, there is a growing smugness and sense of self satisfaction, a borderline arrogance that blinds firms and seems to be permeating the psyche of many of the deshi IT and BP outsourcing businesses. The same focus and conviction that have brought us to the center of the global economic stage, the same vision, determination and commitment to excellence that has transcended borders and positioned us as commercial superpower is presently being subverted and in very practical terms, is preventing us from achieving our true, still untapped potential.

This philosophy is presently enabled by a tight-fisted and close-minded attitude that is often times penny wise but pound-foolish. For a culture that measures its heritage by thousands—not hundreds—of years, and has always placed a premium on humility and charity, this myopic perspective is disheartening and as importantly, is just bad business. Attrition in the call center and IT outsourcing centers of Bangalore, Pune, Chennai, Mumbai and Guargon is spiraling to drastic levels. Not even Nasscom, our friendly trade association who is always ready for an ego stroke, can deny this pattern. We must continue to look forward with an eye on the horizon but also exercise self-awareness and learn from our mistakes. We must be more inclusive and continue to do a better job of listening to our customers and the marketplace.

We need to recognize and reward excellence, irrespective of where it might reside and we must nurture and develop our leaders while embracing the contributions of others who come from different backgrounds. If we see American executives as hired guns, mercenaries who are paid to sell while the real value of our assets reside ten thousand miles away, we will live a self-fulfilling prophecy. Mercenaries are only in business for the money and if there is not a genuine identification with the business and the people, these individuals will simply cycle through to the highest bidder and we, cumulatively, will be the losers. By freeing our minds and following a more enlightened path, today’s accomplishments will pale in comparison to what we will achieve. If not, with the opening of the economy and the increased presence of multinationals, we risk becoming the intellectual coolies of the knowledge economy, our achievements fading like so many once glorious monuments when facing the inevitable test of time.